Ford posts record $1.7bn profit
By John Reed in London and Bernard Simon in Toronto
Published: October 26 2010 13:36 | Last updated: October 26 2010 13:36
Ford Motor reported a better than expected quarterly net profit of $1.7bn, or 43 cents a share, and said that it would be free of net debt by year-end, a year earlier than it had previously said.
The US carmaker’s profit was $690m higher than a year ago, and marked its most profitable third quarter as it continued to benefit from a four-year turnround plan and growing market share for its cars and trucks in key markets around the world.
Ford upheld previous guidance that it would deliver “solid profits” this year with positive automotive operating-related cash flow, and said its earnings would continue to improve in 2011.
Alan Mulally, Ford’s chief executive, said in a statement on Tuesday that the company’s “growing product strength”, a gradually strengthening economy and a focus on improving competitiveness would be the key drivers of improvement in its business next year.
Ford reported improved quarterly earnings across all main units, including its core automotive business and its Ford Credit lending division.
The biggest regional contributor was North America, where Ford earned a pre-tax operating profit of $1.6bn, a sharp improvement on the $314m reported a year ago.
In the US this year, Ford has profited from its strong position in pick-up trucks, where demand is rebounding. The company produces the segment’s top-selling F-Series.
Speaking to the Financial Times, Lewis Booth, chief financial officer, confirmed that Ford had benefited from “a little bit of mix improvement” as consumers bought more of the vehicles in which it specialises.
However, he said the improvement in North America was “broadly based across the business”.
Ford’s improved earnings in its home market, Mr Booth said, were mainly due to improvements in market share, higher prices and the rebuilding of stocks compared with a year ago, when America’s “cash for clunkers” scrappage scheme was in place.
The result marks Ford’s sixth quarterly profit in a row, and exceeded the average market forecasts. Analysts had expected a third-quarter profit of $1.37bn, or 38 cents a share, according to Thomson Reuters. The Dearborn, Michigan-based company’s highest third-quarter net income until now was the $1.13bn it reported in 1997.
Ford said it was taking further actions to reduce debt and strengthen its balance sheet, including paying down its revolving credit line by $2bn on September 9. Mr Booth said that Ford now had $2.5bn drawn on the revolving credit, and another $5bn available from banks.
The company said it now expected its automotive cash to equal its debt by year-end, a year earlier than expected. Ford had said at the time of its second-quarter earnings that it expected to be cash-neutral by the end of 2011.
Automotive debt totalled $26.4bn as of September 30.
Ford was the only Detroit-area automaker to avoid a US government bail-out, a fact that it says has contributed to its growing sales and market share. It is close to unseating General Motors as America’s top-selling automaker.
The company’s share of the US light-vehicle market climbed to 16.7 per cent in September, from 14.7 per cent a year earlier, bringing it within 12,300 vehicles of GM.
Asked when Ford expected to outsell GM, Mr Booth said: “It’s not something we’re focused on.” He added: “We’re trying to compete with everybody – we don’t have a single competitor.”
Since becoming chief executive in 2006, Mr Mulally has downsized Ford’s manufacturing, engineering and brand operations, reduced the number of models it builds and increased the proportion of parts they share.
Ford said it was continuing to make progress on its turnround plan.
Shares in Ford, which came close to slipping below $1 as recently as two years ago, closed at $14.15 on Monday. Its credit rating has improved despite its heavy debt load.
http://www.ft.com/cms/s/0/fa0c48f8-e0f5-11df-87da-00144feabdc0.html?ftcamp=rss
By John Reed in London and Bernard Simon in Toronto
Published: October 26 2010 13:36 | Last updated: October 26 2010 13:36
Ford Motor reported a better than expected quarterly net profit of $1.7bn, or 43 cents a share, and said that it would be free of net debt by year-end, a year earlier than it had previously said.
The US carmaker’s profit was $690m higher than a year ago, and marked its most profitable third quarter as it continued to benefit from a four-year turnround plan and growing market share for its cars and trucks in key markets around the world.
Ford upheld previous guidance that it would deliver “solid profits” this year with positive automotive operating-related cash flow, and said its earnings would continue to improve in 2011.
Alan Mulally, Ford’s chief executive, said in a statement on Tuesday that the company’s “growing product strength”, a gradually strengthening economy and a focus on improving competitiveness would be the key drivers of improvement in its business next year.
Ford reported improved quarterly earnings across all main units, including its core automotive business and its Ford Credit lending division.
The biggest regional contributor was North America, where Ford earned a pre-tax operating profit of $1.6bn, a sharp improvement on the $314m reported a year ago.
In the US this year, Ford has profited from its strong position in pick-up trucks, where demand is rebounding. The company produces the segment’s top-selling F-Series.
Speaking to the Financial Times, Lewis Booth, chief financial officer, confirmed that Ford had benefited from “a little bit of mix improvement” as consumers bought more of the vehicles in which it specialises.
However, he said the improvement in North America was “broadly based across the business”.
Ford’s improved earnings in its home market, Mr Booth said, were mainly due to improvements in market share, higher prices and the rebuilding of stocks compared with a year ago, when America’s “cash for clunkers” scrappage scheme was in place.
The result marks Ford’s sixth quarterly profit in a row, and exceeded the average market forecasts. Analysts had expected a third-quarter profit of $1.37bn, or 38 cents a share, according to Thomson Reuters. The Dearborn, Michigan-based company’s highest third-quarter net income until now was the $1.13bn it reported in 1997.
Ford said it was taking further actions to reduce debt and strengthen its balance sheet, including paying down its revolving credit line by $2bn on September 9. Mr Booth said that Ford now had $2.5bn drawn on the revolving credit, and another $5bn available from banks.
The company said it now expected its automotive cash to equal its debt by year-end, a year earlier than expected. Ford had said at the time of its second-quarter earnings that it expected to be cash-neutral by the end of 2011.
Automotive debt totalled $26.4bn as of September 30.
Ford was the only Detroit-area automaker to avoid a US government bail-out, a fact that it says has contributed to its growing sales and market share. It is close to unseating General Motors as America’s top-selling automaker.
The company’s share of the US light-vehicle market climbed to 16.7 per cent in September, from 14.7 per cent a year earlier, bringing it within 12,300 vehicles of GM.
Asked when Ford expected to outsell GM, Mr Booth said: “It’s not something we’re focused on.” He added: “We’re trying to compete with everybody – we don’t have a single competitor.”
Since becoming chief executive in 2006, Mr Mulally has downsized Ford’s manufacturing, engineering and brand operations, reduced the number of models it builds and increased the proportion of parts they share.
Ford said it was continuing to make progress on its turnround plan.
Shares in Ford, which came close to slipping below $1 as recently as two years ago, closed at $14.15 on Monday. Its credit rating has improved despite its heavy debt load.
http://www.ft.com/cms/s/0/fa0c48f8-e0f5-11df-87da-00144feabdc0.html?ftcamp=rss
