Newswire

AUTOSHOW-UPDATE 1-Ford Europe raises 2003 profit target slightly

(Adds details, background, comments from Ford's Scheele)

By Tom Brown

PARIS, Sept 26 (Reuters) - Ford Motor Co's European operations confirmed a slight improvement in its 2003 profit target on Thursday as the group's cost reductions continues to pay dividends.

Ford Europe chief operating officer Martin Leach said the unit planned to post a significant profit improvement for this year and next year.

"We are certainly keeping our profit target intact and have in fact raised it slightly," Leach said at the Paris auto show.

He also said he expected the Ford brand to boost its market share in Europe to nine percent at about the end of this year from 8.8 percent now.

Backed by pop sensation Kylie Minogue, who made a surprise appearance at the show, Ford introduced several new European vehicles on Thursday, including the Streetka, a convertible version of its Ka small car, a three door version of its high-volume Fiesta and a concept minivan based on its medium-sized Focus car.

Leach said no further job cuts were needed to achieve 100 percent capacity utilisation up, from 93 percent currently.

Since the beginning of 1999, Ford has cut its European workforce to just under 60,000 staff from 97,000.

In addition Ford Europe company had obtained net cost reductions of $1.2 billion since the beginning of 2000.

"We've put our fixed cost structure at the right level," Leach said.

MODEL FOR AMERICA

Ford's European restructuring is the model for the automaker's North American turnaround strategy, which was launched after last year's $5.45 billion loss.

The multi-year North American plan is aimed at generating $7 billion in pre-tax profit by mid-decade, but industry analysts have voiced growing scepticism about the pace of and extent of the cuts needed at the world's second largest automaker.

Ford shares closed up a strong 6.75 percent at $9.97 on Wednesday, but they remain near 10-year lows.

"I think the market's sceptical," Ford President and Chief Operating Officer Nick Scheele told Reuters on Thursday, when asked about the slumping share price.

"We can't fight an overall market sentiment," he added, saying the slump in Ford's market valuation was due to the global decline in equity markets and broader economic concerns.

"I think we just have to know that we're right in our product range and that we're right in our revitalisation plans. and that we will deliver the strategies," he said. "We just have to continue. We can't chop and change because of what the market is doing on any one day. We take the long view." --With additional reporting by Madeline Chambers