Ford posts surprise 1Q profit, still expects full-year loss

But the company's stock surged nearly 12 percent as CEO Alan Mulally reiterated his promise that restructuring will return Ford to black ink for 2009.

The profit, Ford's first since the second quarter of last year, came even during a time when concerns about the U.S. economy kept many car buyers away from showrooms. Ford sales were off about 9 percent for the quarter, and the trend away from trucks and sport utility vehicles accelerated, hurting its bottom line.

Yet Ford said it earned money anyway because of strong profits in Europe and South America, manufacturing cost reductions and successful hedging on commodity price increases.

"The underlying business is improving," Mulally said in a conference call with industry analysts and reporters. "We remain cautiously optimistic despite the external difficulties."

But the question that has dogged Ford for years remains: Does the company, which lost $2.7 billion last year and mortgaged its assets to stay in business, have time to finish restructuring before it runs out of cash?

Mulally says the answer is yes, even as U.S. auto sales and the economy continue to unravel.

Ford's management team, he said, adjusts its plan every week "as we deal with the realities and deteriorating business environment." The key, as Mulally often repeats, is to drop factory capacity to match demand for Ford products.

The core North American market still is the spot that many analysts see as a drag on Ford's plan. And Ford itself acknowledged a string of challenges.

Based on economic concerns, the company reduced its industrywide estimate for U.S. light vehicle sales this year to a range of 15 million to 15.3 million. In January it had forecast full-year sales of 15.7 million.

Ford also cut second-quarter production estimates for North America by 101,000 vehicles compared with the same period last year, a figure that is 20,000 lower than guidance from the previous quarter.