10-QPeriod: Q1 FY2004

FORD MOTOR CO Quarterly Report for Q1 Ended Mar 31, 2004

Filed May 6, 2004For Securities:FF-PCF-PDF-PB

Summary

Ford Motor Company reported a significant increase in profitability for the first quarter of 2004 compared to the same period in 2003. Net income more than doubled, reaching $1.95 billion, or $0.94 per diluted share, up from $896 million, or $0.45 per diluted share, in the prior year. This strong performance was driven by substantial growth in the Automotive sector, which saw a dramatic rise in income before taxes, largely due to improved performance in Ford North America. The Financial Services sector also contributed positively, though its income before taxes saw a more modest increase. Key factors contributing to the improved results include favorable cost performance across various segments, positive net pricing, and stronger vehicle sales volumes, particularly in international markets and for newer models. The company has also benefited from effective restructuring actions in Ford Europe. While overall results are very positive, investors should note the potential impact of continued foreign exchange volatility and intense competition within the automotive industry as highlighted in the outlook section.

Key Highlights

  • 1Net income surged to $1.95 billion in Q1 2004, more than double the $896 million reported in Q1 2003.
  • 2Diluted earnings per share more than doubled to $0.94 from $0.45 year-over-year.
  • 3Automotive sector income before taxes increased significantly to $1.806 billion from $662 million in the prior year.
  • 4Ford North America showed a strong rebound, with income before taxes rising to $1.977 billion from $1.205 billion.
  • 5Total company sales and revenues increased to $44.691 billion from $40.815 billion.
  • 6Despite an increase in Automotive inventories, the company appears to be managing its production and sales effectively, with a slight increase in total Automotive vehicle unit sales.
  • 7Financial Services sector income before taxes rose to $1.083 billion from $678 million, driven by improved credit loss performance and favorable market conditions at Ford Credit.

Frequently Asked Questions

The primary driver was a substantial improvement in the Automotive sector's profitability, particularly in North America. This was supported by favorable cost performance, better product mix, positive net pricing, and increased sales volumes in international markets. The Financial Services sector also contributed positively.

The Automotive sector saw a dramatic improvement, with income before taxes rising to $1.806 billion in Q1 2004, a significant increase from $662 million in Q1 2003. This growth was largely attributed to Ford North America's strong performance, alongside improvements in international operations despite some challenges like foreign exchange rates.

Ford anticipates exceeding its full-year pre-tax income target, driven by strong performance in Ford North America and Financial Services. However, they also acknowledge potential risks including interest rate hikes, foreign exchange volatility, intense competition, and product launch costs. The company is raising its full-year earnings per share guidance.

The Financial Services sector reported increased income before taxes to $1.083 billion in Q1 2004 from $678 million in Q1 2003. Ford Credit was the main contributor, benefiting from improved credit loss performance, higher used vehicle auction values, and a favorable interest rate environment. Hertz also showed improvement, with a reduced loss compared to the prior year.