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Ford Profits Fall 12.7% in Quarter

April 27, 1985|JAMES RISEN

Ford Motor said Friday that its earnings declined 12.7% to $783.3 million in the first quarter from last year's $897.2 million, mainly because of higher income tax payments.

Ford's pretax earnings rose to a record $1.319 billion, up 1.4% from $1.301 billion in the first quarter of 1984, thanks to a 3.2% increase in worldwide unit sales of cars, trucks and tractors during the period. But the company's worldwide income-tax bill increased 35.6% to $527 million, up from last year's $388.5 million.

Almost all of Ford's earnings came from its U.S. operations, which made $626 million on an after-tax basis, down 8.3% from $683 million in the first quarter of 1984. Ford sold 528,942 cars in the United States during the January to March period, up 5.8% from last year's 499,857 units.

The company's share of the American market, including imports, rose to 19.9%, its highest first-quarter level in five years.

Ford's net sales rose to $13.2 billion, up 1.8% from $13 billion in 1984's first quarter.

Ford became more exposed to taxes during the quarter because in 1984 it exhausted all of the investment tax credits that it had saved up from the recession, when it was spending heavily on capital programs at the same time that it was losing money.

The company also has run out of tax-loss carry-forwards to shield its earnings. During the early 1980s, Ford used up those tax benefits to get retroactive refunds from the taxes that it had paid when it was profitable in the late 1970s.

Ford's earnings decline followed similar announcements of tumbling profits by General Motors and Chrysler earlier in the week. Blaming rising tax payments, Chrysler said its earnings fell to $507.6 million, down 28.1%, while GM said its earnings fell 33.6% to $1.072 billion because of rising product development costs and a slip in its market share. Last year, both companies had set first-quarter earnings records.

American Motors, meanwhile, reported a loss of $29 million during the first quarter, compared to a profit of $5.1 million last year.

Combined, the four U.S.-based manufacturers earned $2.33 billion for the period, down 27.6% from last year's record of $3.22 billion.

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