Ford earnings soar on US revival: Second-best quarter in company's history helped by cost controls in Europe, but Jaguar applies the brake

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The Independent Online
A DRAMATIC turnaround in the US car market and tough cost controls in Europe helped Ford Motor Company to its second-best quarter yet at the end of 1993, earning dollars 719m on sales of dollars 108.5bn.

In the same period a year earlier Ford lost dollars 840m, with almost half the loss the result of restructuring charges at its European automotive and financial services operations.

The last quarter's results were again dragged down by a dollars 109m restructuring charge at Jaguar and losses in Europe.

For the year Ford of Europe lost dollars 407m and Jaguar dollars 371m in a market that saw industry-wide sales fall more than 16 per cent.

Both results were an improvement on a combined dollars 1bn loss in 1992, and the company predicted a slight improvement in the European market for the coming year, with sales of 12.8 million vehicles against 12.6 million last year.

Ford also achieved success with its new Mondeo, which ranked among the five best-selling cars in Britain last year.

But the company concedes that it has a long way to go before it becomes profitable outside North America.

'Looking ahead, we are in good shape for 1994, but there is still more to do,' said Alexander Trotman, Ford's British-born chief executive.

Jaguar in particular is expected to remain a drag on earnings for some time. Last week the president of Jaguar North America, Mike Dale, told dealers at the Chicago Auto Show that the company would not make a profit this year despite an expected increase in US sales of about 20 per cent to 15,000 cars.

Worldwide, Jaguar is expected to sell about 30,000 cars, leaving it still shy of its break-even point, which Mr Dale said was 'in the low thirty- thousands'.

Ford's booming American business was responsible for the real turnaround in car-making, running a profit of dollars 669m during the final three months of 1993 after recording a loss the year before.

The big recovery - the strongest in Ford's history - led the company to a dollars 297m profit in worldwide car sales despite continuing losses of dollars 372m outside the US.

Ford factories in North America operated at 103 per cent of capacity during the final three months of the year, and are likely to run at 108 per cent during the current quarter, the company said.

Ford's shares still slipped in New York yesterday on the release of the year-end results, despite the fact that fourth-quarter earnings per share, at dollars 1.30, were well above Wall Street's average forecast of dollars 1.13.

Traders said expectations had been raised by impressive 1993 figures from Chrysler two weeks ago and recent upbeat predictions for the US economy.

Ford's own January sales figures were so strong themselves that they caused many US economists to raise their forecasts for growth in the economy as a whole.

Several analysts said the market appeared to be reacting with concern to the weak operating results in Europe, which were exaggerated by currency-exchange losses of dollars 100m.

But Ford's treasurer, David McCammon, said later that the company was happy with the job it had done in reducing costs.

'We were not too disappointed with Europe, given the decline in volume across the industry,' Mr McCammon said. 'Everybody is hurting over there, and at least we have a hot new product to brag about.'

Ford will introduce its North American version of the Mondeo in September and expects to sell 350,000 of the cars in its first model year.

Ford shares recovered a little but they still closed down dollars 1 at dollars 681 2 late in the New York session.