Ford Motor Co on Tuesday said earnings will fall this year due to a drop in profit from its finance unit, which it expects to be hit by rising interest rates. But the second-largest US auto-maker said it was still on track to meet its goal of posting $7 billion in annual pre-tax profit by 2006. Ford forecast a 2005 profit of between $1.75 and $1.95 per share excluding special items, or pre-tax profit of $5 billion to $5.7 billion.
Wall Street analysts on average expect Ford to post a profit of $1.87 per share, according to Reuters Research. Last year Ford earned $2.11 a share, or pre-tax profit of $5.8 billion excluding special charges.
Ford said it expects its financial services unit, which includes Ford Credit and Hertz Corp, to post a pre-tax profit of $3.5 billion to $3.7 billion this year, down from nearly $5 billion in 2004.
In addition to higher interest rates, the financial unit will be hurt by lower volume and a non-recurrence of loan loss reserve reductions, Ford said.
The auto-maker also said it intends to earn between $1.5 billion and $2 billion from its core automotive operations before taxes, up from a profit of $850 million before taxes last year.