The Dearborn, Mich, company posted net income of $1.11 billion, or 90 cents a diluted share, compared with $1 billion, or 80 cents a share, in the year-ago period. Analysts surveyed by First Call/Thomson Financial had predicted a profit of roughly 85 cents a share for the latest quarter. Ford's posted the solid gain even though its earnings were reduced $125 million by one-time expenses related to higher costs for retiree healthcare and life insurance at its parts division, Visteon Automotive Systems. Sales at Ford, the world's second-largest automobile maker, climbed 16 per cent to $37.97 billion from $32.64 billion a year earlier. "We continued our strong earnings momentum, despite very competitive markets world-wide, by building our brands, leveraging the synergies offered by our global scale and maintaining a rigorous cost discipline," said Ford's chief executive officer Jacques Nasser in a statement.

The US automobile industry is on target to set a sales record this year as the robust economy combined with discounting on cars and trucks spark strong demand. Rising oil prices and interest rates could take some of the froth out of the market over the balance of the year, but analysts believe the pace of sales will remain strong.

General Motors Corp posted strong third-quarter earnings last week, beating Wall Street's expectations and reversing the loss suffered during last year's 54-day United Auto Workers strike. Strong sales in North America provided most of the power as its earnings jumped to $877 million, or $1.33 a share, beating the consensus estimate of $1.24 a share.

Earnings in Ford's automotive operations totaled $690 million, a gain of 7 per cent over $646 million last year. Revenue from auto operations was up 18 per cent to $31.34 billion from $26.49 billion. Its after-tax return on sales was 2.2 per cent, down from 2.5 per cent a year ago. Ford said the decline was "more than accounted for by the retiree benefit adjustment" at Visteon.

Third-quarter North America automotive earnings were $1 billion, up 12 per cent, or $104 million, from $900 million a year ago. Return on sales in North America was 4.5 per cent, flat compared with a year ago.

Ford lost $171 million in Europe in third-quarter 1999, compared with a loss of $273 million a year ago. The company said that based on current forecasts, it "does not expect to achieve its 1999 milestone for Europe to improve operating earnings year-over-year."

The Wall Street Journal