Updated from 8:16 a.m. EDT

Ford

(F) - Get Report

swung to a profit on a 3% increase in first-quarter vehicle sales and a front-loaded securitization program, and affirmed guidance for all of 2003.

The company earned $896 million, or 45 cents a share, compared with a loss of $1.1 billion, or 61 cents a share, a year ago including accounting charges. The company blew away the analyst consensus of 22 cents a share and somewhat less explicably its own 20-cent forecast. Among the reasons for the improvement it gave were greater-than-expected cost cuts in its automotive unit: $638 million cut, compared with its goal of $500 million.

In its North American automotive unit, Ford earned $1.2 billion pretax on revenue of $22.2 billion, compared with $465 million on revenue of $21.5 billion a year ago. It cited cost cuts, favorable mix and higher market share, offset partially by lower industry volume.

Another driver was its lending arm, Ford Motor Credit, but the quality of the improvement in that segment could face some scrutiny. Profits more than doubled to $442 million and the provision for loan losses was lower, but an unspecified portion of the gain came from receivables sales, not generally a sign of organic strength. Ford also said the benefits were offset by a lower level of managed receivables.

Company executives said on a conference call that the company securitized more receivables than it expected in the first quarter -- about half what it expects to securitize all year.

Looking forward, the company said it expects to earn about 10 cents a share in the second quarter, which would result in first-half 2003 earnings of about 55 cents a share.