Market Updates
Ford Withdraws Profit Outlook, Cuts Production
123jump.com Staff
22 May, 2008
New York City
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Ford Motor Company stock fell 7.5% after it withdrew its 2009 profitability target and cut production. The company now expects at the best to break-even in the year before taxes and special charges. In the second and third quarter auto maker plans to cut production by as much as 20% and between 2% and 8% in the fourth quarter from a year ago. Consumers are increasingly opting for smaller cars and avoid gas guzzling trucks.
[R]10:55AM New York – Ford drops 7% on production cuts and withdrawal of 2009 profit target.[/R]
Ford Motor Company withdrew its profit guidance for the year and said that it hopes to achieve break-even before taxes and excluding special charges. Ford also plans to cut is production in the next two quarters as sale of pick-ups and utility vehicles decline in the face of rising crude oil prices.
Ford had vowed to be profitable in 2009 and now no longer expects its domestic automotive operations to be profitable in the year. The troubled automaker is battling rising steel and other metal prices and its consumers are struggling with a surge in crude oil prices and tougher lending conditions for automobiles.
In the second quarter Ford plans to build 690,000 units, nearly 18% lower than a year ago and estimates similar production cut in the third quarter from a year ago. In the fourth quarter Ford hopes estimates production cut of between 2% an 8%, which may turn out to be optimistic.
Ford stock ((F)) plunged 58 cents or 7.4% to $7.22.
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