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June 16, 2004, 7:04 p.m. EDT

Ford raises 2004 outlook

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By CBS MarketWatch

SAN FRANCISCO (CBS.MW) -- Ford Motor sharply raised its earnings outlook Wednesday for the second quarter and 2004, citing a healthy performance by its financial services sector amid low interest rates.

The company /zigman2/quotes/208911460/composite F -3.67% said it was raising its earnings estimate for the second quarter by 15 cents to a range of 45 cents to 50 cents a share, up from 30 cents to 35 cents previously.

At the same time, Ford boosted its full-year earnings outlook to a range of $1.65 to $1.75 a share, compared with a previous range of $1.50 to $1.60 a share.

The numbers are based on continuing operations, excluding special items.

It was the second time this year Dearborn, Mich.-based Ford, the second biggest U.S. car manufacturer after General Motors Corp. /zigman2/quotes/205226835/composite GM -2.15% , raised its earnings estimates.

Prior to today's announcement, a First Call survey of securities analysts pegged Ford's estimated second quarter earnings at 42 cents a share.

"The increase primarily reflects the strong performance of the company's Financial Services Sector, which has benefited from lower than anticipated credit losses, improved vehicle residual values and a continuation of the low interest rate environment," Ford said in a statement.

Interest rates in the United States have languished this year near 40-year lows, keeping a lid on the cost of financing a new car or truck and making it less likely buyers will default on their loans.

At the same time, the Ford said it expects to make more money from "improved vehicle residual values," or the sale of used cars coming off lease programs.

Ford's new car business has been tougher this year, with overall sales slumping 2 percent to 1.4 million through the end of May compared with the same five-month period last year.

Ford earlier indicated that special items, including sales of non-core businesses and a restructuring of its European operations, would lower its full-year earnings by about 4 cents to 9 cents a share.

Ford shares closed up 22 cents at $15.63 on the New York Stock Exchange, a 1.4 percent gain on the day.

$ 19.14
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