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Tue, Mar 06, 2001 EST
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Ford Earnings Drop $600 million in Fourth-Quarter
By Jim Suhr   Associated Press
DEARBORN, Mich. — Ford Motor Co.'s fourth-quarter earnings fell to $1.2 billion, a $600 million drop-off the automaker attributed to softened U.S. auto sales. The results matched Wall Street's lowered expectations.

The world's second-largest automaker said Thursday it earned 64 cents a share for the three months ending in December, compared with $1.8 billion, or 83 cents a share, for the same period of 1999.

The results exclude earnings from Visteon Corp. -- the parts arm Ford spun off in 2000 -- or a one-time charge of $133 million associated to a Nemak joint venture on castings.

Including the special charge, but not Visteon, Ford earned $1.1 billion, or 57 cents a share.

Analysts surveyed by First Call/Thomson Financial had expected earnings of 64 cents a share, having trimmed that forecast 10 cents after Ford's fourth-quarter earnings warning last month.

For all of 2000, Ford said it earned $6.67 billion, or $3.26 a share, compared with $6.8 billion, or $5.49 a share, in 1999.

Earnings in Ford's automotive operations totaled $762 million, more than half the $1.4 billion of the year-ago period.

"We will face softening U.S. market conditions in 2001," Jacques Nasser, Ford's president and chief executive, said in a statement. "However, our excellent portfolio of brands, customer focus and commitment to executing our strategies set us apart from our competitors.

While automakers have struggled in recent months to winnow inventories bloated by slackened demand, Nasser called Ford focused on "improving our cost structure, bringing production in line with demand, generating positive cash flow and delivering another year of strong financial results."

Ford's North American automotive earnings were $740 million, compared with $1.6 billion in 1999. The results from 1999 include $103 million in lump-sum payments under contracts with the United Auto Workers and Canadian Auto Workers.

Overseas, Ford earned $22 million, excluding one-time charges. In Europe, Ford's earnings of $33 million reversed a $30 million loss during the same period a year ago. In South America, the automaker lost $31 million, $69 million less than the red ink there in 1999. Fourth-quarter earnings in other markets around the world totaled $20 million, double from the year earlier.

Ford Credit earned $410 million in the fourth quarter, up $101 million from a year ago.

Rental car company Hertz Corp., of which Ford owns about 81.5 percent, earned $56 million in the quarter, down $5 million. Ford's share of Hertz's earnings was not immediately available.

Ford said Tuesday it has reached a $710 million deal to acquire all of the Hertz shares it doesn't already own, with the deal expected to close within months, pending approval from Hertz shareholders and regulators.

Ford last month warned its fourth-quarter earnings would be down about 10 cents a share, or roughly $190 million, below analysts' estimates then of 74 cents a share. Ford also said then it would cut production with a series of shutdowns at 16 North American factories, affecting tens of thousands of workers, with the bulk of those shutdowns coming later this month.

Ford's moves followed similar ones by General Motors Corp. and DaimlerChrysler AG, all of which have found themselves stuck with thousands of extra vehicles amid falling demand for new cars and trucks in the United States.

Ford expects total output for this year's first quarter to be just more than 1 million vehicles, a 17 percent reduction over the same period last year, and has said it would assess the economic picture again before the spring selling season.

Ford has said severe winter weather in the midwestern United States and Canada caused delays in workers and parts getting to plants on time, which cut 26,000 vehicles from Ford's fourth-quarter plan. Like other automakers, Ford relies on "just-in-time" delivery of parts, and keeps inventories as low as possible.

Ford has said the missed production hurt its revenues in the fourth quarter, but also decreased the number of vehicles Ford had to cut from first quarter production.

Ford also said a parts shortage in Europe cut into profits there.

The automaker said last week it looks this year to bolster revenues by $5 billion and cut $1 billion in costs. Those goals are the same as the previous two years, but might be slightly more ambitious with the slowing of the U.S. market.

Ford also said it wanted to boost its return on sales to 4 percent in the United States and 1 percent in Europe, and turn a profit in its Asia/Pacific region.

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