DETROIT - As Ford Motor Co. celebrated its first quarterly profit in two years yesterday, Chief Executive Officer Alan Mulally emphasized to anyone who would listen - including UAW members who might view the result as an economic turning point - that victory is still about a year and a half away.

Despite the company’s surprising $750 million profit in the second quarter, a result of Ford’s strong performance overseas and intense cost-cutting in Dearborn, Mich., Mulally noted that the company’s crucial North American division is still losing money.

"We have a long way to go," he said of the company’s turnaround plan.

As Mulally talked to workers in a town hall meeting, analysts on a conference call and reporters in interviews, he sought to temper enthusiasm about the results with realism about Ford’s long-term situation - especially as the automaker and union sit down to negotiate a new labor contract.

"North America is losing a lot of money, and it’s projected to lose money in the third quarter, the fourth quarter, year end, 2008," Mulally told the Detroit Free Press. "We have a long way to go to get back to profitability and have a viable business. ... That’s what we have to focus on."

Investors had been expecting the 104-year-old automaker to post about $700 million in losses amid a tough North American market.

Instead, Ford posted profits that were substantial enough to offset its loss in the first quarter and put the company $468 million in the black for the first half of the year.

What’s more, Ford has more available cash than expected, a total of $37.4 billion.

The good news caught investors’ eyes on a day when the stock market dramatically fell. Ford was the most-traded stock on the New York Stock Exchange, closing the day at $8.09, up 12 cents, or 2 percent.

Dearborn Truck Plant worker Gary Walkowicz, 57, of Detroit, viewed the news as a relevant development as the UAW and Ford sit down to craft a new contract.

"There’s been a lot of talk about how Ford is doing poorly," he said. "I think this shows to me more reasons why we should not be giving up anything."

Harley Shaiken, a professor on labor issues at the University of California, Berkeley, said he believes the profit will shade the labor talks to some degree.

"Ford would have been better served to have profits in the third quarter," he said. "With a backdrop of profitability, it’s going to make members scrutinize the final deal all that much more sharply."

But Mulally, who has been on the job for less than a year, spoke bluntly when asked whether this promising performance should factor into talks with the UAW, which kicked off Monday. "I think the second quarter will not color the talks at all because the talks will really center on the long-term competitiveness of Ford," he said.

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