Ford Profit Falls

The company slashes second-quarter guidance but maintains lowered full-year expectations.
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Ford

(F) - Get Report

posted a drop in first-quarter earnings and guided toward a second-quarter loss as the big American carmakers continue to struggle with weak sales.

For its first quarter ended March 31, the Dearborn, Mich., auto giant earned $1.18 billion, or 58 cents a share, from continuing operations. That's down from the year-ago $1.96 billion, or 95 cents a share. Automotive revenue rose to $39.3 billion from $38 billion a year earlier. Excluding special items, latest-quarter earnings were 62 cents a share.

The latest-quarter figures beat the Thomson First Call analyst consensus estimate, which had called for a 39-cent profit on sales of $36.8 billion. But Ford made up for that by guiding toward a loss of up to 15 cents a share for the second quarter, where analysts had forecast a 38-cent profit.

Ford warned Wall Street two weeks ago that tough auto industry business conditions would cause it to miss its 2005 earnings projection by more than 20%. The company trimmed its full-year guidance

to a range of $1.25-$1.50 a share from the previous $1.75-$1.95 range on April 8 as high oil and steel prices, along with pressure from Asian competitors, continued to weigh on profits. Ford had previously guided toward the low end of the earlier range.

Ford maintained its 2005 guidance Wednesday, saying it would focus for the rest of the year on cutting costs, boosting quality and improving product development. The news comes a day after Ford's main Detroit rival,

General Motors

(GM) - Get Report

, posted a $1.1 billion loss. GM too has been slashing earnings guidance amid signs that the company is having difficulty competing with rivals like

Toyota

(TM) - Get Report

and Korea's

Hyundai

. Meanwhile, GM has been pointing toward a looming crisis on its rising employee and pensioner health care costs.

Like GM, Ford has been increasingly dependent on its financing arm for profits in recent quarters. On Wednesday, the company said automotive pretax profit plunged to $579 million from $1.8 billion a year earlier, while the finance service sector posted a $1.1 billion pretax profit.

Ford closed at $9.28 Tuesday.