Ford surprises Wall Street by cutting losses as sales fall

Ford, the only major US car company to have avoided bankruptcy this year, has been able to reduce its losses, even as car sales have collapsed.

The results astonished Wall Street, where investors sent Ford shares up 10 per cent in the first hours of trading, and analysts began to wonder if the company is being too conservative in warning that the red ink will continue for another 18 months.

While General Motors and Chrysler were restructuring in bankruptcy court over the spring, Ford has been winning market share with popular new models and sorting out its finances.

Alongside its results yesterday, Ford said it had made a deal with the United Autoworkers union which will limit the amount of shares it must issue to the UAW's new healthcare trust for employees. It has also restructured its debts, cutting them by $10.1bn, thereby reducing its annual interest bill by $500m. It has also been shutting factories and laying off staff, but that process is over for the time being, the company said yesterday. "Our underlying business is growing progressively stronger," said Alan Mulally, chief executive. "We are introducing great new products that customers want and value, while continuing to aggressively restructure our business and strengthen our balance sheet."

The company's operating loss was $424m in the three months to the end of June, up $609m on the same period last year, despite a 29 per cent slump in revenues. Ford sold 1.17 million cars in the quarter, compared to 1.56 million in the second quarter of 2008.

Its new Ford Fiesta is the number two small car in Europe, and Ford was the best-selling brand in Canada for the first time in more than 50 years. In the US, the company has pulled level with Toyota in surveys of customer satisfaction.