S&P: Ford unaffected

Standard & Poor's said the ratings and outlook on Ford Motor Co. and Ford Motor Credit Co. (both BB+/negative/B-1) are not immediately affected by Ford's announcement of significantly lower earnings guidance for the full-year 2005.

However, S&P said it believes there is now an increased likelihood that the ratings, which were lowered from BBB-/negative/A-3 on May 5, will ultimately be downgraded further.

The agency said management's full-year earnings guidance has been reduced to $1.00 to $1.25 per share compared with earlier guidance of $1.25 to $1.50, which S&P interprets to mean that Ford's North American automotive operations will generate a substantial loss this year, reflecting its vulnerability to cost, market share and pricing pressures, even though overall industry demand remains robust.

Ford does, however, have substantial liquidity, which would be enhanced with completion of the contemplated monetization of its ownership of Hertz Corp. (BBB-/watch developing/A-3), S&P added.

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