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Ford reports second-quarter profit of $2.6 billion


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Ford reports second-quarter profit of $2.6 billion

Jamie LaReau

Automotive News -- July 23, 2010 - 7:02 am ET

DETROIT -- Ford Motor Co. reported a second-quarter profit of $2.6 billion as U.S. sales rose 20 percent and the automaker continued to gain market share.

Ford earned $2.1 billion on automotive operations, compared with a year-earlier loss of $1.1 billion on that basis. Revenue rose $4.5 billion to $31.3 billion.

The results surpassed an earlier projection by CFO Lewis Booth, who said in April that the company's first-quarter profit of $2.1 billion would be the year's strongest. Ford said today the second half won't be as profitable as the first half.

“We delivered a very strong second quarter and first half of 2010 and are ahead of where we thought we would be despite the still-challenging business conditions,” CEO Alan Mulally said in a statement.

Ford ended the quarter with automotive gross cash of $21.9 billion, down from $25.3 billion at the end of the first quarter. The company attributed the decline to debt-reduction efforts and product launch costs.

“We remain on track to deliver solid profits and positive automotive operating-related cash flow for 2010, and we expect even better financial results in 2011,” Mulally said.

Ford said its automotive debt fell to $27.3 billion from $34.3 billion at the end of the first quarter. The automaker also said that by the end of 2011, it expects to move from an automotive net debt position to a net cash position.

Ford's U.S. market share stood at 17.5 percent through June, up almost 1.5 points from the year-earlier figure and up a tenth of a point for the quarter

Read more: http://www.autonews.com/apps/pbcs.dll/article?AID=/20100723/OEM/100729942/1448#ixzz0uVTuXQnI

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Ford posts another quarterly profit as sales climb

DEARBORN, Michigan (AP) — Ford Motor Co. surprised Wall Street with a $2.6 billion profit in the second quarter as it continued to grab sales from rivals in a slowly recovering U.S. market.

It was Ford's fifth straight quarterly profit. The company also expects to be profitable in the second half of the year, although less profitable than in the first half. The automaker sees even stronger results in 2011.

For the second quarter, Ford earned 61 cents per share. That compared with net income of $2.3 billion, or 69 cents per share, in the same quarter a year ago. The year-ago results were mainly driven by debt repayments.

Without special items, Ford earned 68 cents per share, exceeded analysts' expectations of 40 cents per share. Analysts don't factor in one-time items, including $229 million in charges related to the discontinuation of the Mercury brand.

Ford's revenue rose to $31.3 billion from $27.2 billion a year earlier, more than analysts' forecast of $29.8 billion. U.S. sales rose 28% in the first six months of this year. That's almost double the industry pace.

Ford paid off $7 billion in debt in the second quarter, including a $3.8 billion cash payment to a United Auto Workers trust fund that pays retiree health care bills. The automaker ended the quarter with $27.3 billion in debt, which will cut its interest payments by $470 million per year.

The debt helped finance a series of highly regarded new products, which has helped Ford grab buyers' attention. The No. 2 U.S. automaker ended the quarter with 17.2% of the U.S. market, up from 16.9% at the end of the first quarter, according to auto information site Edmunds.com.

Ford said Friday it expects to end 2011 with more cash than debt. It now has $21.9 billion in cash.



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Ford posts $2.6 billion profit as sales climb

Christine Tierney / The Detroit News

Dearborn -- Ford Motor Co. reported higher-than-expected net income of $2.6 billion for the second quarter, reflecting profits across all of its automotive operations and a big improvement in earnings in its core North American market.

"We delivered a very strong second quarter and first half of 2010, and are ahead of where we thought we would be despite the still-challenging business conditions," Ford President and CEO Alan Mulally said today in an earnings statement.

Ford's $2.6 billion quarterly profit, on revenue of $31.3 billion, compared with a $2.26 billion profit a year earlier. Its pre-tax operating profit totaled $2.9 billion, or 68 cents per share, the company's best quarterly performance in six years. On an operating basis, the results were substantially higher than analysts' expectations, averaging 40 cents per share.

Chief Financial Officer Lewis Booth said the company had repaid $7 billion of debt, reducing its interest expense by more than $470 million on an annual basis.

"We said we'd pay down our debt by running this business better," he told reporters. "Sometime next year, we expect net debt to move to positive net cash, which is another important step forward."

Ford ended the quarter with $27.3 billion of automotive debt, after the repayment, and $25.4 billion of cash, including available credit lines.

The Dearborn automaker predicted that the second half of 2010 would not be as profitable as the first half, on an operating basis, but next year's profits would exceed this year's.

First-half net profit totaled $4.68 billion.

"As in most years, Ford's first-half results will be stronger than second half, reflecting normal seasonality -- including lower second-half volumes related to planned shutdowns and product launches," the company said in its statement.

Rising steel, aluminum and other commodity prices also will weigh on the results for the second half of the year, but the company doesn't see the economic recovery flagging, Booth said.

"We're in a period of slow recovery -- it's not a rapid recovery -- but we think it's sustainable," he said. Ford expects industry-wide U.S. auto sales to total between 11.5 million and 12 million this year.

Ford is benefiting from the effects of a restructuring under Mulally and growing pricing power reflecting the rising strength of its automotive brands during a difficult time for the industry as a whole. The company has shown an automotive and total company pre-tax operating profit for four consecutive quarters.

Ford's big launches this year include a new Ford Explorer SUV and Focus car.

"We're building this business on great products, and the second half has a slew of great products coming to market," Booth said.

Ford sold 1.4 million vehicles in the second quarter, up from 1.2 million a year ago.

From The Detroit News: http://detnews.com/article/20100723/AUTO01/7230397/1148/auto01/Ford-posts-$2.6-billion-profit-as-sales-climb#ixzz0uVcoesF3

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Ford Posts $2.6 Billion Second-Quarter Profit

Nelson Ireson July 23rd, 2010

Ford often gets a lot of undue credit for surviving the financial econo-storm without needing government aid--most forget that Ford actually ran out of cash before General Motors and Chrysler, but was able to get private financing because it happened before the lending landscape self-destructed. Returning to profit, however--and $2.6 billion of it, at that--does deserve some kudos.

So how did Ford manage to turn what was a $424 million loss in the second quarter of 2009 into an expected $2.6 billion reported today? The North American market did exceptionally well, with Ford North America posting a second quarter pre-tax operating profit of $1.9 billion, a $2.8 billion improvement from the second quarter of 2009.

Ford’s second quarter revenue, meanwhile, was $31.3 billion, up $4.5 billion from the same period a year ago. The company also ended the second quarter with debt from its automotive unit totaling $27.3 billion, down $7 billion in the quarter. The reduction included a $3.8 billion payment by Ford to the UAW Retiree Medical Benefits Trust, and a $3 billion repayment of Ford’s revolving credit facility.

Ford attributes its strong results to increased sales, which rose by 20 percent compared to the same period one year ago. With more sales of expensive cars, in particular, comes larger profit margins. The bargain-basement deals on economy cars leave little room to pad the bottom line, but more luxurious vehicles offer the chance to turn options packages, extra equipment, and higher base prices into measurable profits.

Additionally, building cars in the most common combinations of options and trim specifications means Ford is being more efficient. A full 80 percent of Ford's sales are generated on just 20 percent of the possible model combinations; focusing on building the most popular combos means vehicles don't sit on lots, eventually being sold for a steep discount--which works its way back to higher sticker prices and better bottom lines.

The question now will be whether Ford and the market in general can continue to sustain this growth--and whether we'll see similar profit figures from Chrysler and GM. With the all-new 2011 Ford Explorer to be launched on Monday and the pricing punch of the new 2011 Lincoln MKZ Hybrid, it certainly looks like Ford is on the right track.



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Ford may beat Q2 expections, earn $1.62B

By Mark Kleis

As quarterly earnings reports draw nearer, analysts are suggesting that earlier estimates of Ford Motor Company’s earnings may have been low – and some are revising estimates to a higher $1.62 billion figure.

An estimate made before the start of 2Q, 2010, by 11 analysts working with Bloomberg suggested that Ford might earn $1.4 billion during that period. Now, that estimate is being revised by Bloomberg, as their latest report is citing an increase in average sales price at the automaker helping to drive higher profits.

The report points to the most extreme example of increased transaction price with the 2010 Taurus, which is on average selling for $6,300 more per car than the outgoing model. This massive increase is due to the total redesign of the vehicle, and as a result, a move upscale thanks to a bevy of new technologies and features – all items that help earn more profit with each sale.

“On the Taurus, we’re finding that people like them pretty well loaded up so we’re not ordering them stripped down anymore,” said Jack Kain, representing a Ford dealer in Versailles, Kentucky. “People are pre-sold on Ford when they come in here and they’re getting all the bells and whistles.”

During the first quarter of 2010, Ford enjoyed an additional billion dollars in pre-tax earnings as a direct result of increased net sales prices. Ford now boasts the highest average transaction price of mainstream automakers in the U.S., according to Edmunds’ data. That trend is expected to continue upward during 2Q 2010, raising average sales prices even higher, and bringing profit along with it.

Now, 12 analysts have revised their estimates from Ford’s earnings to 41 cent per share, or $1.62 billion.



Update: Ford earns $2.6B in 2Q, beats predictions

By Mark Kleis

Just Thursday Leftlane reported on several new analysts’ predictions that ford would raise their second quarter earnings from $1.4 billion to $1.62 billion.

Now, Ford has released their earnings data and have handily beaten both the original and updated earnings projections, bringing home a net income of $2.6 billion for the 2Q. Ford was originally expected to earn just 38 cents per share in 2Q, which was revised to 41 cents yesterday, and in reality ended up at 61 cents per share – a $338 million improvement over the same quarter in 2009, and a $932 improvement over the first quarter of 2010.

Ford says its Automotive Operations posted a 2Q pre-tax profit of $2.1 billion, which is a $3.2 billion improvement from second quarter 2009 and an $872 million improvement from first quarter 2010.

Ford’s total revenue for 2Q totaled $31.3 billion, up $4.5 billion from 2Q 200. Ford says that if it doesn’t include Volvo’s 2009 data it would show an increase of $7.4 billion, which would be an increase of over 30 percent.

Cash position changes

Ford is reporting that in 2Q 2010 it was able to retire $7 billion in debt, effectively lowering its annual interest obligations by $470 million, and leaving $27.3 billion in debt. Ford also earned $21.9 billion of Automotive gross cash, with total liquidity of $25.4 billion during 2Q. Automotive operating-related cash flow was $2.6 billion positive.

Ford announces plans pay off debt

One of Ford’s major criticisms is that it took on too much debt in its effort to avoid government aid, a move that some critics say will ultimately catch up to the automaker and keep it from being competitive.

Ford believes otherwise, stating today they it intends to move from an Automotive net debt position to a net cash position by the end of 2011.

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