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Ford, GM Cut Costs, Post Q2 Profit

July 26, 2007

Ford Motor Company reported last week a net profit of 31 cents per share, or $750 million, for the second quarter of 2007. This compares with a net loss of 17 cents per share, or $317 million, in the second quarter of 2006.

Ford's second-quarter revenue was $44.2 billion, up from $41.9 billion a year ago. The increase primarily reflected currency exchange, mix and net pricing improvements, partially offset by lower volume.

Special items - which primarily reflected the sale of Aston Martin and the recognition of previously deferred gains on certain hedges at Jaguar and Land Rover - increased pre-tax results by $443 million in the second quarter.

With regard to Jaguar and Land Rover, the company confirmed it is currently exploring in greater detail the potential sale of the combined business and is in discussions with selected parties who have expressed interest. The company also is conducting a strategic review of Volvo that likely will conclude prior to year-end.

GM earned $891 million, or $1.56 a share, more than double analysts' estimates on rising sales in Europe and reduced spending in North America.

GM CEO Rick Wagoner says GM trimmed North American losses by cutting health-care and manufacturing costs. GM's European unit had its biggest profit since 1996 on a 9.4 percent revenue gain led by models such as the Opel Corsa and Astra.

Though profits rose, GM revenue declined 13 percent to $46.8 billion on the sale of a majority stake in GMAC LLC, the former General Motors Acceptance Corp. finance unit. Also, GM's restructuring costs dropped 89 percent to $520 million.

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