Ford Motors Raises Third Quarter and 2004 Earnings Outlook; Announces 1,150 Job Cuts at Jaguar

DETROIT September 17, 2004; John Porretto writing for the AP reported that Ford Motor Co. raised its third-quarter and full-year earnings forecast for 2004 citing continued strong performance Friday at its financial services arm, even as the company's car business in the key U.S. market struggles.

The news came on the same day Ford announced about 1,150 job cuts in England to streamline its Jaguar unit, where weak sales have failed to offset spending on new products and other parts of the business.

In a conference call, Ford also said Jaguar would exit Formula One racing at the end of 2004 so the brand can focus on its core automotive business. The Formula One racing division is for sale, the company said.

"The actions we're taking today, while difficult, are absolutely necessary to set Jaguar back on the right path and ensure a strong and sustainable business for the future," said Jim Padilla, Ford's chief operating officer and chairman of its automotive operations.

On the New York Stock Exchange, shares of Ford rose 27 cents, or 1.9 percent, to close Friday at $14.22.

Ford, the nation's No. 2 automaker behind General Motors Corp., raised its third-quarter earnings outlook by 10 cents per share to a range of 10 to 15 cents per share from continuing operations, excluding special items, compared with zero to 5 cents per share.

Analysts polled by Thomson First Call forecast earnings of 10 cents per share for the quarter.

Ford said full-year earnings would be in the range of $1.90 to $2.00 per share, compared with previous forecasts of $1.80 to $1.90 per share. Those estimates also are from continuing operations and exclude special items.

Wall Street analysts were expecting earnings of $1.99 per share.

In the April-June period, Ford Motor Credit reported record net income of $897 million, up $496 million from a year ago, accounting for the bulk of Ford's $1.2 billion profit. The financing side of Ford's business has continually propped up earnings in recent quarters.

Ford said the job cuts in England and its decision to cease Formula One operations would result in pretax charges of about $450 million -- roughly $375 million this year and the remainder in 2005.

In England, Ford said it plans to halt operations at its Browns Lane Jaguar plant by the end of 2005, and consolidate operations of the luxury brand into its Castle Bromwich plant. Ford also said it will reduce Jaguar's remaining production plan for 2004 by 15,000 units.

"We have too much capacity, and that is our underlying structural problem," said Joe Greenwell, chairman and chief executive of Jaguar and Land Rover.

Ford's Premier Automotive Group, which includes Volvo, Jaguar, Land Rover and Aston Martin, reported a pretax loss of $362 million in the April-June second quarter, after posting a profit of $166 million a year earlier.

In particular, Ford officials said Jaguar's U.S. sales had been disappointing and that cost improvements at Jaguar and Land Rover had been slower than expected -- a situation the company pledged to correct. The weak U.S. dollar has also hurt profits.

For the first eight months of 2004, Jaguar's U.S. sales were off 11.5 percent, while Land Rover was down 15.4 percent, according to figures from Autodata Corp. Ford's overall sales for the same period were off nearly 5 percent.

Sluggish U.S. sales of Jaguar's X-Type sedan, introduced a few years ago to compete in the competitive entry-level luxury car market, are one reason for the company's woes.

Sales through August were down 16 percent from a year ago, hurt by offerings in the same category from brands such as Cadillac, Infiniti, Lexus and Acura.

"That was a big strategic shift for Jaguar when they went downstream with the X-Type," Mike Wall, an analyst with CSM Worldwide in Grand Rapids, said. "There were questions whether they could do it or not. The styling maintained some of the Jaguar cues, but I think people over here were looking at it and saying, 'There are so many other better products out there.'"

Ford Motor Co.: http://www.ford.com