Ford's Q1 Operating Earnings Up 20 Percent To Record $1.8 Billion
15 April 1999
Ford's First Quarter Operating Earnings Up 20 Percent To Record $1.8 Billion; 12th Quarter of Improvement
DEARBORN, Mich., April 15 -- Ford Motor Company
today reported record first quarter operating earnings of $1,814 million, or
$1.46 per diluted share of common and Class B stock, up $300 million or
20 percent on a comparable basis. This marks Ford's twelfth consecutive
quarter of year-over-year improvement in operating earnings.
Reported first quarter earnings, which include a one-time gain of
$165 million on the dissolution of AutoEuropa, Ford's joint venture with
Volkswagen AG in Portugal, were $1,979 million, or $1.60 per share, up
$465 million. The operating results of Volvo Cars will not be reflected in
Ford's financial results until the second quarter of 1999.
Ford's reported first quarter earnings in 1998 were $17,646 million, or
$14.23 per share. Comparable first quarter 1998 results were $1,514 million,
or $1.22 per share. This excludes $177 million of earnings from Associates
First Capital , the one-time non-cash gain of $15,955 million
resulting from The Associates spin-off, and an earnings-per-share reduction of
seven cents resulting from the premium paid to repurchase Ford's Series B
preferred stock.
"The Ford team is energized and focused, and we were determined to make a
fast start in 1999," said Jacques A. Nasser, president and chief executive
officer. "In a few short months, thanks to a tremendous team effort, we
completed the acquisition of Volvo Cars, created the Premier Automotive Group
to drive the growth of our premium brands, recruited several talented
executives to the company and announced our intention to acquire Kwik-Fit,
Europe's largest vehicle maintenance and light repair chain. We followed this
up with record earnings. The best news for our consumers and shareholders is
that the transformation of Ford is really just getting started."
AUTOMOTIVE OPERATIONS: Ford's operating earnings from worldwide
automotive operations were $1,486 million, up $251 million, or 20 percent,
from the same period a year ago. Ford's reported automotive earnings, which
include the $165 million AutoEuropa gain, were $1,651 million, up
$416 million. Worldwide automotive revenues in the first quarter of 1999 were
a record $31,933 million, up 10 percent compared with a year ago. After-tax
return on sales improved nine-tenths of a point to 5.2 percent.
Automotive cash was $23.5 billion at the end of the quarter, up
$2.2 billion from a year ago. Net cash was $12 billion, down $1.1 billion.
The decline was more than explained by the first installment payment for the
acquisition of Volvo Cars. Total automotive costs declined by $100 million at
constant volume and mix in the first quarter. Ford's full-year milestone is
to reduce total costs by $1 billion compared with 1998.
Strong consumer acceptance of the company's products has been driving
profitability, and the coming six months will see a number of important
vehicle introductions, including the second quarter launch of the Jaguar
S-Type in North America and Europe. Product launches in North America also
include the Lincoln LS and Ford F-650/750 commercial trucks in the second
quarter, and the Ford Taurus, Mercury Sable, Ford Focus and Ford Excursion in
the second half.
North America: Automotive operations earned $1,588 million in the first
quarter of 1999, up $578 million from the same period a year ago. After-tax
return on sales was 6.6 percent, up 1.6 points. Ford's full-year milestone
for North America is to achieve an after-tax return on sales greater than
5 percent.
Total vehicle sales in the United States set a new first quarter record,
with the annual selling rate increasing from 15.3 million units in 1998 to
16.9 million units in 1999. Ford's sales were strong across the board, with
light trucks up 20 percent and retail car sales up 10 percent. In response to
the strong consumer demand, Ford recently increased its second quarter
production by 10,000 cars and 20,000 trucks.
Europe: Ford broke even in the first quarter of 1999 on an operating
basis, compared with earnings of $230 million a year ago. Ford's reported
first quarter 1999 earnings in Europe, which include the AutoEuropa gain, were
$165 million. The results reflect, in part, lower volumes and higher fixed
marketing costs for brand awareness and product launches. Ford's 1999
milestone for Europe is to grow earnings compared with 1998.
Overall, the vehicle market in Europe continues to be strong, and the Ford
Focus continues to gain momentum. Ford has now delivered about 200,000 Focus
models to consumers in Europe, including 60,000 units in March alone.
South America: Ford lost $165 million in the first quarter of 1999,
compared with a loss of $45 million in the same period a year ago. Ford's
full-year milestone for South America is to improve operating results, but
given the adverse economic environment in the region, the company does not
presently expect to achieve its goal.
FORD CREDIT: Ford Credit earned $300 million in the first quarter of
1999, up $22 million, or 8 percent, compared with the first quarter of 1998.
The earnings growth reflects higher financing volumes, improved credit loss
performance and lower taxes, offset partially by higher depreciation expense
on leased vehicles. Ford Credit is on track to meet its 1999 full-year
milestone to grow earnings by 10 percent compared with 1998.
VISTEON AUTOMOTIVE SYSTEMS: In the first quarter of 1999, Visteon earned
$208 million, up 10 percent compared with the same period a year ago, and won
future new business contracts expected to generate revenues of $700 million
annually. Visteon's full-year 1999 milestone is to grow earnings and win
$2 billion in new business contracts. Visteon's earnings are included in the
company's automotive results.
HERTZ: The Hertz Corporation reported record first quarter
earnings of $49 million, up $14 million, or 38 percent, from the same period a
year ago. Ford's share of Hertz' first quarter earnings was $40 million in
1999 and $29 million in 1998.
"Record first quarter earnings give us a strong platform to continue to
deliver great products and services to our consumers and great returns to our
shareholders," Nasser said.
Ford Motor Company and Subsidiaries
HIGHLIGHTS
First Quarter
1999 1998
(unaudited)
Worldwide vehicle unit sales of
cars and trucks
(in thousands)
- North America 1,220 1,057
- Outside North America 554 670
Total 1,774 1,727
Sales and revenues (in millions)
- Automotive $31,933 $29,076
- Financial Services 5,952 7,508
Total $37,885 $36,584
Net income (in millions)
- Automotive $1,651 $1,235
- Financial Services (including income of
The Associates through March 12, 1998) 328 456
Subtotal 1,979 1,691
- Gain on spin-off of The Associates - 15,955
Total $1,979 $17,646
Capital expenditures (in millions)
- Automotive $1,338 $2,101
- Financial Services 144 98
Total $1,482 $2,199
Automotive capital expenditures as a
percentage of sales 4.2% 7.2%
Stockholders' equity at March 31
- Total (in millions) $24,747 $21,497
- After-tax return on Common and
Class B stockholders' equity 33.0% 24.8%
Automotive net cash at March 31
(in millions)
- Cash and marketable securities $23,456 $21,277
- Debt 11,477 8,178
Automotive net cash $11,979 $13,099
After-tax return on sales
- North American Automotive 6.6% 5.0%
- Total Automotive 5.2% 4.3%
Shares of Common and Class B Stock
(in millions)
- Average number outstanding 1,211 1,210
- Number outstanding at March 31 1,211 1,213
Common Stock price (per share)
(adjusted to reflect The Associates spin-off)
- High $66-1/2 $43-5/8
- Low 55-1/4 28-5/16
AMOUNTS PER SHARE OF COMMON AND CLASS B STOCK
AFTER PREFERRED STOCK DIVIDENDS
Income assuming dilution
- Automotive $1.33 $0.99
- Financial Services (including income of
The Associates through March 12, 1998) 0.27 0.37
Subtotal 1.60 1.36
- Premium on Series B Preferred Stock
repurchase - (0.07)
- Gain on spin-off of The Associates - 12.94
Total $1.60 $14.23
Cash dividends $0.46 $0.42