Vice President and Controller Robert Shanks also said Ford expects pretax profit to be lower in the second half of the year compared with the first half. He said the guidance is consistent with what the company said when it released first-quarter earnings in April.
"We expected at that time that the first-quarter earnings would be potentially the best of the year," Shanks told an analysts' conference in Chicago. "The second quarter could actually be very close to the first quarter, maybe a little bit lower."
Falling slightly below the first quarter isn't all that bad. Ford reported pretax income of $2.8 billion, or 62 cents per share. Its net income of $2.6 billion after taxes was its best quarterly performance in 13 years.
Shanks' statements were clearly aimed at protecting Ford's stock price by preparing Wall Street for lower earnings. Analysts polled by FactSet on Wednesday were predicting Ford would make 64 cents per share before taxes in the second quarter.
In the fourth quarter of last year, Ford fell short of analysts' expectations. It posted an 80-percent drop in profits, missing forecasts and ending two years of better-than-expected results. On the day the earnings were announced in January, Ford shares lost more than 13 percent of their value and have yet to recover. Ford said it should have kept analysts better informed about potential problems in the quarter, including a loss in Europe and a $1 billion cost increase in North America.
So on Wednesday, Shanks said structural costs would rise by $2 billion this year due to future product investment, increased factory capacity requirements to meet higher sales, and the cost of strengthening the company's brand image. He also said raw material costs will go up by $2 billion.
He told the analysts that revenue will rise due to higher sales and because Ford expects to keep prices up.
The predictions, he said, also are consistent with the normal seasonal swings in the auto business. The second half is normally a little weaker than the first.
He also said the company expects to pay common stock dividends before 2015 as it further pays down debt and returns its debt ratings to investment grade.
General Motors Co. and Ford last week tried to reassure investors that sales and profits will continue despite worries about the U.S. economy and slowing auto sales. Carmakers have been hit with a string of bad news this spring, from the March 11 earthquake in Japan that left dealers short on cars to rising gas prices and unemployment. U.S. auto sales fell in May, their first monthly decline this year.
The news has hurt. GM's shares have lost more than 12 percent of their value since selling for $33 per share in an initial public stock sale last November. Ford's stock price, meanwhile, has fallen nearly 15 percent since the start of May.
Ford shares fell 28 cents, or 2.1 percent, to close at $13.15 Wednesday.
Copyright 2011 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.
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