Ford Motor yesterday said it had moved into profit last year for the first time since 2000, despite losses in the fourth quarter related to restructuring in Europe and a deal with its former car parts division.

For the full year, the auto firm recorded profits of $495m (£268m), reversing a loss of $980m in 2002. Full-year sales rose 1% to $164bn.

Chairman and chief executive Bill Ford Jr said the business remained on track to meet the ambitious targets set in 2001, when the company fell to losses of $5.4bn. The turnaround plan is aiming at producing $7bn in annual profits by the middle of the decade.

The company fell $793m into the red during the fourth quarter after having to take more than $2bn in charges.

Around $475m stemmed from the reduction of capacity in Ford's struggling European division, where 4,700 jobs have been cut. A further $1.6bn related to Ford's agreement with the car parts business Visteon, to untangle pricing and cost sharing issues, including legacy employee benefits after spinning the division off.

Ford's core auto business moved into profitability last year, making $104m, against a loss of $253m in 2002.

In common with rivals, the best performer of the business was the financing arm. In the fourth quarter alone, Ford Credit earned $470m, a 33% rise on the same period a year earlier, as American consumers continued to sign up to low cost financing promotional deals.