Ford results beat expectations

Recalling Firestone tyres on the Explorer contributed to the loss

Ford Motor lost $752m in the second quarter, including the cost of replacing 13 million Firestone tyres, but has still beaten analysts' expectations.

Ford's loss contrasts with General Motors' second-quarter profit of $477m reported on Tuesday.

Although we are disappointed it resulted in a second quarter loss, it was the right thing to do for the safety and trust of our customers.

Jacques Nasser
Ford president

Nevertheless, profits for both companies have shrunk from the record highs of a few years ago as increased competition squeezes sales and margins.

But Ford, which the world's second biggest car market, said it earnings forecasts were still on target.

"Despite the challenges we face, Ford remains in a strong competitive position and our balance sheet remains strong," said Ford president and chief executive officer, Jacques Nasser.

Tyre recall

Firestone tyres have been linked by federal investigators to about 200 deaths and 700 injuries, many in Ford Explorer Sports Utility Vehicles (SUVs).

Firestone has countered the claims by linking the deaths to design flaws in the Explorer - in a bitter war of words with Ford.

Ford, which in May announced it would the replace the tyres at a cost of $2.1bn after taxes, said all the losses from the replacement program were absorbed in the second quarter.

"Although we are disappointed it resulted in a second quarter loss, it was the right thing to do for the safety and trust of our customers," said Jacques Nasser.

The automaker said about two million tyres have been replaced, and it expects to complete the program by the first quarter of 2002.

Sales fall

Ford said its worldwide vehicle sales during the second quarter of 2001 were down 7% compared with the second quarter of 2000.

The cost of launching the X-Type hit European profits

As a result revenues were $42.3bn, down 5% from $44.5bn in the second quarter a year ago.

The company lost $1.14bn in North America in the quarter, compared with a profit of $1.84bn for the same period a year ago.

It also lost ground in Europe with earnings of $141m during the second quarter compared to $156m last year.

While sales of the new Ford Mondeo sedan and Transit van were up, losses at Land Rover and the cost of launching the Jaguar X-Type pulled profits down.

The restructuring of Mazda Motor, of which Ford owns a third, cost $201m.