Ford surprises with 1st-quarter profit of $100m

Tripled results in Europe, job cuts produce gain

DEARBORN, Mich. - Ford Motor Co. reported an unexpected first-quarter profit as chief executive Alan Mulally tripled earnings in Europe and extended cuts that have eliminated 46,300 jobs in the past two years, a sign his turnaround plan may be working.

Ford shares gained 88 cents, or 11.7 percent, to $8.40. The world's third-largest automaker said it earned $100 million, or 5 cents a share, compared with a deficit of $282 million, or 15 cents, a year earlier. Analysts had forecast a loss in large part because of sales declines in North America, where Ford deepened planned production cuts yesterday.

With more expense reductions about to kick in and Dearborn, Mich.-based Ford stepping up vehicle introductions, Mulally may be poised to deliver on his promise to stop losses that totaled $15.3 billion in 2006 and 2007.

"In the face of strong headwinds, it looks like the turnaround is taking hold," said Mirko Mikelic, senior portfolio manager at Fifth Third Asset Management in Grand Rapids, Mich.

Mulally still confronts a slowing economy, record high gasoline prices, and shrinking US demand, where Ford has yielded market share for 13 straight years.

Yesterday, the automaker cut its forecast for 2008 industrywide sales and lowered its planned North America production in the current quarter to 710,000 vehicles from 730,000 planned previously, or 101,000 fewer than the year-earlier output.

The $520 million improvement in European pretax profit was the biggest surprise, said Argus Research analyst Kevin Tynan in New York, who had predicted a loss of 10 cents a share.

"In the greater scheme of things, they are moving in the right direction, but there are still a lot of concerns," said Tynan, who is maintaining his "sell" recommendation on the stock. He said that Ford's $1.2 billion reduction in structural costs in North America was exceeded by a $1.4 billion revenue decline in the region.

Excluding costs the company considers one-time expenses, the profit was $525 million, or 20 cents a share. On that basis, Ford was expected to report a loss of 15 cents, the average estimate of 13 analysts surveyed by Bloomberg. Revenue increased 1.2 percent to $43.5 billion.

Before yesterday, the automaker had just one profit in 20 months under Mulally, when it earned $750 million in the second quarter of 2007.