Ford’s Quarterly Profit Climbs 82%

DEARBORN, Mich. — Ford Motor Co. said Wednesday that its fourth-quarter net income jumped 82% to $1.2 billion as its U.S. truck sales boomed.

But the nation’s No. 2 auto maker lost heavily overseas, particularly in Europe and South America, keeping its full-year profit gain to just 7% over the previous year.

John Devine, Ford’s chief financial officer, said that even with flat or lower industry sales in 1997, the company expects to increase profit on the strength of the popularity of its cars and trucks and lower costs.

“The major improvement we expect in 1997 is on our cost structure,” Devine said. If successful, Ford could see lower expenditures this year than last, which has never happened before, he said.

Ford reported fourth-quarter earnings of $1.2 billion, or 99 cents a share, compared with $660 million, or 48 cents a share the previous year. The year-ago results were depressed by the costs of introducing the mid-sized Taurus, subcompact Escort and F-Series truck. Ford faced no comparable outlays in the latest quarter.

For the year, Ford earned $4.4 billion, or $1.47 cents a share, compared with income of $4.1 billion, or $1.23 cents a share in 1995. Revenues totaled nearly $147 billion, up 7% from 1995.

“It was a respectable performance,” said analyst Nicholas Loboccaro of Bear Stearns & Co. “But the competitive environment is likely to get tougher this year.”

The results were slightly better than Wall Street expectations. Ford shares eased 12.5 cents to $32.375 Wednesday on the New York Stock Exchange.

In addition to the earnings, investors may have been watching the progress of a strike that began Tuesday at two Johnson Controls plants that supply seats for Ford’s hot-selling Expedition sport-utility vehicle.

The Expedition was introduced in October as a competitor to General Motors’ Suburban. Demand has been heavy, and analysts estimated that Ford makes $10,000 on each Expedition it sells.

Such profit is endangered by the strike by about 500 United Auto Worker members who are demanding a contract with higher wages. Johnson Controls planned to continue production with replacement workers, but Ford told the supplier Tuesday that it would not accept seats made by nonunion employees.

“Our relationship with the union is very important to us,” Devine explained.

Analysts said they expected a quick settlement. Johnson executives and UAW officials agreed to return to the bargaining table Wednesday afternoon.

The Expedition is the latest bright spot in Ford’s strong truck lineup, which now accounts for 55% of its U.S. vehicle sales. The company is predicting that truck sales--pickups, minivans and sport utilities--will continue to grow as car sales shrink.

Ford’s U.S. auto operations earned $628 million in the fourth quarter, compared with $168 million a year ago. For all of last year, the U.S. operations earned $2 billion, up from $1.8 billion in 1995.

The news was not so cheery abroad. Ford lost $291 million in Europe last year, contrasted with a profit of $116 million in 1995. Ford has been hurt by brutal competition and a surplus of low-profit cars.

“Europe is tough for everyone,” said Alex Trotman, Ford chairman.

Ford also took a big hit in South America, where it is rebuilding operations after dissolving its Autolatina joint venture with Volkswagen. The company lost $642 million there last year, compared with a 1995 loss of $94 million.

The company’s financial units continued to perform well.

But Ford Motor Credit, the company’s auto loan unit, saw its 1996 earnings fall $138 million to $1.4 billion because of an increase in bad loans.