Ford Motor Co's quarterly profit beat Wall Street expectations, helped by higher prices and improved sales in North America.

Ford, the only U.S. automaker that did not accept a government bailout, has posted a net profit for eight straight quarters. It had racked up net losses of $30 billion from 2006 through 2008 when it cut jobs, sold unprofitable brands and reshaped a lineup laden with large SUVs and pickup trucks.

In North America, Ford's pretax profit for the second quarter rose 0.5 percent to $1.91 billion.

North America was the only region where the company's profit improved. In Europe, where Ford's performance has been lagging in recent quarters, pretax profit was trimmed nearly in half to $176 million.

Ford shares were up 1.7 percent at $13.40 in trading before the market opened on Tuesday.

Chrysler also reported on Tuesday, posting a wider second-quarter net loss after the U.S. automaker repaid $7.6 billion in debt stemming from its 2009 federal bailout.

Ford did not alter its North American production outlook or its 2011 U.S. auto sales forecast.

However, Ford Chief Financial Officer Lewis Booth said the company now expects full-year U.S. industry auto sales to be at the low end of a range of 13 million to 13.5 million vehicles. It had expected 2011 sales at the high end of that range earlier in the year, he said.

Ford's sales forecast includes medium and heavy trucks, which account for 250,000 to 300,000 in annual sales.

Excluding one-time items, Ford's quarterly profit fell to 65 cents per share from 68 cents a year ago. Analysts on average had expected earnings of 60 cents per share excluding one-time items, according to Thomson Reuters I/B/E/S.

Revenue rose 13 percent to $35.5 billion.

Net income fell to $2.4 billion in the quarter, or 59 cents per share, from $2.6 billion, or 61 cents per share.

We delivered very good quarter results while growing the business globally and serving more customers in every region, said Ford Chief Executive Alan Mulally. Despite an uncertain business environment, we further strengthened our balance sheet and continued to invest for the future.

Booth said the company continued to lower its automotive debt, by $2.6 billion in the quarter to $14 billion.

INVESTMENT GRADE PROGRESS

This wasn't the easiest of quarters, Booth said. We've got through the Japanese tsunami issues very well. We lost some units (vehicle production) in Asia Pacific, but managed to lose a lot less than we expected and we didn't really lose any significant units anywhere else in the world. It's just evidence that the plan's working.

Ford is striving to return to an investment grade rating by the major ratings agencies. Booth said he could not predict when the company may return to investment grade.

Most major agencies have Ford rated two notches below investment grade. Ford was last at investment grade in May 2005.

However, Booth said he expected a re-examination by the agencies once labor talks with the United Auto Workers union are completed. Those talks will officially begin this Friday for Ford.

The UAW represents about 41,000 Ford auto production workers.

Ford's hourly all-in labor cost per worker is about $58, compared with about $50-$51 per hour for Chrysler and about $57 per hour at GM.

The gap between Ford and its Japanese rivals with U.S. plants has narrowed from about $25 to $30 in 2007 to about $5 to $10 now, according to the Center for Automotive Research of Ann Arbor, Michigan.

Ford's labor costs are higher than Chrysler mainly because it has hired fewer than 100 so-called second-tier workers who make about half the pay of veteran UAW-represented workers, while about 12 percent of Chrysler's 22,800 union auto workers make the lesser wage.

The Ann Arbor consultant also said that Ford's estimated U.S. auto production labor costs are about $5.1 billion annually.

COMMODITY COSTS UP

Booth said that Ford's profit was hampered by higher commodity costs related mainly to higher oil prices. He said prices for plastics, steel, aluminum, cooper and precious metals are all on the rise and affecting profit margins.

As we continue to see growth in Asia, commodities stay under pressure, he said.

In its home U.S. market, the No. 2 U.S. automaker had a 16.9 percent market share through the first half of this year, compared with 17 percent a year ago.

Ford's sales in the first half of the year rose 12 percent versus a 17 percent rise for General Motors Co and 20 percent for Chrysler Group LLC.

(Additional reporting by Ben Klayman; Editing by Derek Caney and Matthew Lewis)

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