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Ford Lowers Earnings Guidance

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Ford Motor Company reduced its full-year earnings guidance for 2005. Last month, the Company said its full-year 2005 earnings-per-share would be at the lower end of its guidance, which was $1.75 to $1.95 per share.

The Company now expects full-year earnings per share in 2005 to be in the range of $1.25 to $1.50. The Company said it still expects automotive operating cash flow to be positive and for 2005 automotive pre-tax profits to be break even at best. All earnings-per-share guidance excludes the effect of special items, which presently include items related to the Premier Automotive Group improvement plan, the Company’s investments in fuel cell technologies, and the sale of a non-core business. Those special items are estimated to be in the range of $0.08 to $0.10 per share for the full year.

The updated guidance anticipates that first-quarter earnings, to be announced on April 20, will actually exceed the Company’s previous first- quarter guidance of $0.25 to $0.35 per share. But the expected difficult business conditions in the automotive sector for the remainder of the year have affected the company’s full-year outlook. In addition, while the company expects improvements in the future, it no longer expects to reach its previously stated goal of $7 billion in total company pre-tax profits, excluding special items, as early as 2006.

“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,” said Don Leclair, executive vice president and chief financial officer. “Throughout the first quarter we saw those and other business factors worsening, and as a result in mid-March we announced that we expected our full-year performance to be at the lower end of the guidance we provided in January 2005. The Company’s analysis of recent market trends, which include the prospect of higher and sustained gasoline prices and continued aggressive pricing actions by competitors, have led us to conclude that further challenges lie ahead. Accordingly, we have revised our earnings outlook for the full year.”

Commenting on these developments, Ford Chairman and Chief Executive Officer Bill Ford said: “Although one of our strongest ever product line-ups has been well received by consumers around the world, we are not immune to the broad economic challenges we all face in our industry. In addition to launching great products, we’ve cut costs by $4 billion over the past three years, and we’ll continue to stay focused on creating further efficiencies.

“Obviously there are actions we could take to achieve our pre-tax profit goal of $7 billion for 2006, but we will not mortgage Ford’s future by chasing an objective set under vastly different market and economic conditions. We are unwilling to cut the essential investments in the products, technologies, infrastructure and expanding markets that are the very building blocks of our future.

“Given the recent difficulties in the market and the uncertainties in the global economy, we have been working for some time on the next logical extension of our business plan. We will provide an overview of our future direction and more details about our 2005 earnings outlook in our April 20 earnings call.”

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Ford Lowers Earnings Guidance
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