Ford posts surprise profit, sees solid 2011
Detroit, November 3, 2009
Ford Motor posted a $1 billion quarterly profit on Monday, defying Wall Street forecasts of a loss, as it cut costs and gained market share, leading it to raise its 2011 outlook to 'solidly profitable' from break-even.
Ford's shares surged 8 percent as the surprising profit and increased outlook overshadowed news that the United Auto Workers union rejected a tentative cost-cutting deal with the automaker that would have brought its labor costs in line with US rivals.
The only large US automaker not to file for bankruptcy in 2009, Ford also said later on Monday it is seeking to extend its revolving credit facility from 2011 to 2013 and raise another $3 billion of capital through convertible debt and equity offerings.
The quarterly results provided more evidence that Ford has distanced itself from US rivals General Motors Co and Chrysler, which have struggled to complete restructurings after emerging from government-funded bankruptcies earlier in 2009.
Ford seized North American market share from GM and Chrysler when they halted most production to prepare and execute their bankruptcy cases.
'We're creating a very strong business and we are not taking taxpayer money,' Mulally said on a conference call with analysts. 'So the advantages clearly outweigh any potential disadvantage.'
Ford reported $1.3 billion of positive cash flow in the third quarter, its first positive quarter since the second quarter of 2007, and forecast positive cash flow in the fourth quarter. It burned through $4.7 billion of cash in the first half of 2009.
The company also reported its first quarterly operating profit in North America since the first quarter of 2005.
Ford said it was confident the global economy would be improving by 2011, but it added the near-term growth outlook 'remains rather uncertain.' Some analysts believe Ford will be profitable in 2010.
'As the market starts to turn and sales volumes start to recover, Ford should be solidly in the black next year, certainly ahead of schedule,' Autoconomy.com analyst Erich Merkle said.
Ford reported a net profit of $997 million, or 29 cents per share, for the third quarter, compared with a net loss of $161 million, or a 7 cents per share, a year earlier. Revenue fell $800 million to $30.9 billion.
Operating profit was 26 cents per share excluding one-time items. On that basis, analysts on average expected a loss of 12 cents per share, according to Thomson Reuters I/B/E/S.
The automaker's results were boosted by Ford Motor Credit Co, which reported that profits rose to $427 million in the third quarter from $95 million a year earlier.
From its automotive business, Ford reported a $446 million pretax operating profit worldwide, including positive results in all four of its regions.
Mulally said he was 'cautiously optimistic' and some financial market indicators were returning to levels seen before the Lehman Brothers collapse in September 2008, but consumer confidence and high unemployment remain a drag on the US and UK economies.
'We're just not sure about the strength of the recovery,' Mulally said.
Ford posted losses totaling $30 billion from 2006 through 2008 and remains saddled with a much heavier debt load than GM or Chrysler following their bankruptcy reorganizations. -Reuters