Ford Slashes Its 2005 Earnings Forecast

The $7 billion target was viewed as a crucial milestone in the 5-year turnaround plan Ford launched in January 2002, when the industrial icon was teetering on the brink of collapse.

"Historically high prices for steel and crude oil, escalating health care expenses and a weak U.S. dollar presented formidable challenges as we entered 2005," Chief Financial Officer Don Leclair said in a statement.

Ford said those pressures have intensified, while aggressive price competiton continues in the U.S. auto market.

The automaker cut its 2005 earnings forecast to a range of $1.25 to $1.50 per share from its previous estimate of $1.75 to $1.95 per share.

Ford cautioned last month that its 2005 earnings would likely be at the lower end of its forecast range.

The revised forecast excludes the effect of special charges, which are estimated to be in the range of 8 to 10 cents per share for the full year. Analysts on average expect Ford to post earnings of $1.68 per share in 2005.

But despite rising costs, the automaker said first-quarter earnings per share will exceed previous guidance of 25 cents to 35 cents and full-year automotive operating cash flow is still expected to be positive.

The company will report its quarterly results on April 20 and said it will provide an overview of its future then.

Ford shares were down nearly 6 percent, or 63 cents, at $10.40 on the Inet electronic brokerage in after-hours trading late on Friday.

(Additional reporting by Dan Wilchins in New York)