Here comes the good news again, Ford has posted a net profit of $2.1 bn in the first quarter. And friends here I am not talking about Ford India, its the global industry picking up and sales are booming all around the world. This is happening after six long years after 2004 that Ford has posted more than $ 2 bn profit. Back then the company sold nearly 17 million vehicles in US alone. This year however the sale for the entire industry is below 12 million. Still the automaker plans to produce nearly 625,000 vehicles to sell in U S and Canada in the next quarter. This will be 9% more than first quarter and 39 % more than last year.
Company has deeply shrunk the operations by closing plants and the staffs are very less compared to last year. This was company`s fourth consecutive quarterly profit, shows how much Ford has managed to pick up the momentum with the new products. The net profit was equal to 50 cents a share, compared with a loss of $1.4 billion, or 60 cents a share, one year ago. Based on its first-quarter results, Ford expects solid profits and positive cash flow from its automotive operations for all of 2010, a year ahead than it had forecast.
“This is not from the work that they’ve done over the last three to six months,” said Erich Merkle, an analyst and president of the consulting firm Autoconomy.com in Grand Rapids, Mich. “This is the turnaround they’ve had in place for several years now. They’re in a position where they invested during the downturn in product, and now as we come out of the recession they’ve got the hot product in hand.”
Another reason that helped Ford to grow specially in American continent was Toyota`s recall of 9 million vehicles since November 2009. While GM and Chrysler filed for bankruptcy and Toyota losing people`s confidence, Ford was the only major player left in the market. Ford’s share of the United States market rose to 16.6 percent in the first quarter, up 2.7 percentage points from a year ago.
“The basic engine that drives our business results — products, market share, revenue and cost structure — is performing stronger each quarter, even as the economy and vehicle demand remain relatively soft,” the company’s chief executive, Alan R. Mulally, said in a conference call. “While we are pleased with our progress we do not underestimate the challenges ahead. Even as we see positive signs in the global economy, the recovery is fragile.”
Press Release [source: Ford]
DEARBORN, Mich., April 27, 2010 – Ford Motor Company [NYSE: F] today reported first quarter 2010 net income of $2.1 billion, or 50 cents per share, a $3.5 billion improvement from first quarter 2009, as strong selling new products, improvements in its global Automotive operations, and higher profits at Ford Credit boosted results.
Excluding special items, Ford reported pre-tax operating profit of $2 billion, or 46 cents per share, an improvement of $4 billion from a year ago. It marked Ford’s highest quarterly pre-tax operating profit in six years.
Ford North America posted first quarter pre-tax operating profit of more than $1.2 billion, a $1.9 billion improvement from first quarter 2009, as a result of higher volume and mix and favorable net pricing. Ford operations in South America, Europe and Asia Pacific Africa as well as Ford Credit also posted pre-tax operating profits in the first quarter and improved results over the same period in 2009.
“The Ford team around the world achieved another very solid quarter, and we are delivering profitable growth,” said Ford President and CEO Alan Mulally. “Our plan is working, and the basic engine that drives our business results – products, market share, revenue and cost structure – is performing stronger each quarter, even as the economy and vehicle demand remain relatively soft.”
At the end of March, Ford entered into a definitive agreement to sell Volvo and related assets to Zhejiang Geely Holding Group for $1.8 billion, subject to customary purchase price adjustments. The sale is expected to close in the third quarter of 2010. As a result of the agreement to sell Volvo, all of Volvo’s 2010 results are being reported as special items and excluded from Ford’s operating results; 2009 data include Volvo.
Ford’s first quarter revenue was $28.1 billion, up $3.7 billion from the same period a year ago. If Volvo had been excluded from 2009, Automotive revenue would have increased by $7 billion, or more than 30 percent.
Ford finished the first quarter with $25.3 billion in Automotive gross cash, an increase of $400 million since year end. Automotive operating-related cash outflow was $100 million during the first quarter, as Automotive pre-tax operating profit was more than offset by changes in working capital and other timing differences, as well as a $300 million payment to Ford Credit reflecting up-front subvention payment. The company ended the first quarter with total Automotive debt of $34.3 billion, an increase of $700 million compared to year-end 2009.
On April 6, Ford paid down $3 billion of the drawn amount of its 2013 revolving credit facility. This payment has reduced Automotive gross cash and debt by $3 billion, which will be reflected on Ford’s second quarter 2010 balance sheet. The action did not affect Automotive liquidity, as the repaid amounts remain available for borrowing.
Special items were a favorable pre-tax amount of $125 million in the first quarter of 2010, or 7 cents per share. Ford recorded a $188 million gain related to held-for-sale adjustments for Volvo, which was offset partially by $63 million of global personnel reductions and dealer-related charges. If Volvo had continued to be reported as an ongoing operation, Ford would have reported a first quarter pre-tax operating profit of $49 million for Volvo.
“We are seeing the benefits of our One Ford plan around the world,” said Lewis Booth, Ford executive vice president and chief financial officer. “All of our business operations – North America, South America, Europe, Asia Pacific Africa and Ford Credit – were not only profitable, but also showed substantially improved results over a year ago.”
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