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Ford says it is ready to get back to business


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Ford says it is ready to get back to business

$2.6B profit is best showing since '04



The pain, at long last, may be over for Ford employees, and the company is ready to turn its full attention to expanding sales and market share in the U.S. and abroad, company CFO Lewis Booth told the Free Press on Friday.

"We're in the process of moving from the very difficult times we've been through to growing the business," Booth said.

That included more than $30 billion in losses from 2006 to 2008; a 43% reduction in the North American work force, to 70,000, and the shuttering of 14 assembly and parts plants.

But on Friday, Ford reported a profit of $2.6 billion for the second quarter, its best performance since 2004. That brings Ford's half-year profits to $4.7 billion, compared with $834 million during the same period a year ago.

"Overall, we are ahead of where we thought we'd be after this excellent first half," Ford President and CEO Alan Mulally said during a conference call with reporters and analysts. "And, we expect even better results in 2011."

Ford also said Friday its North American work force grew to 72,000, up 2,000 from March 31 -- the company's first quarterly employment increase since 2005.

The employment growth included the hiring of new workers at the company's plant in Cuautitlan, Mexico, as the company began building the Ford Fiesta subcompact that is reaching dealerships now. Ford also brought back workers from temporary layoff at its Chicago Assembly Plant. Ford is hiring 1,200 workers there as it prepares to build the 2011 Explorer SUV.

Booth said Ford's turnaround is gaining ground because of the success of new products, such as last year's redesigned Ford Fusion midsize sedan and the redesigned Super Duty pickup. Ford's ability to get consumers to buy pricier versions of its new vehicles is also helping.

Ford's second-quarter average U.S. transaction prices increased 7% to $30,322, Edmunds.com says.

Progress on debt

As it is increasingly successful, Ford is rapidly reducing its debt, viewed as one of the company's few large competitive challenges.

Ford survived the recession without filing for bankruptcy because it borrowed $23 billion in 2006. But that left the company with more debt than crosstown rivals General Motors and Chrysler, which reduced their debt during their bankruptcy reorganizations.

But during the second quarter, Ford paid off $7 billion of its debt and finished the quarter with $27.3 billion in total debt. That debt reduction will cut Ford's annual interest payments by $470 million.

Eric Selle, credit analyst for J.P. Morgan, wrote in a research note to investors Friday that Ford might be able to get to investment grade status within two years.

Ford, which reported $2.6 billion in positive cash flow for the quarter, also said it expects that its available cash will exceed its total debt before the end of 2011.

"A great deal has been made over the fact that Ford has significantly more debt than General Motors," said Shelly Lombard, a debt analyst for Gimme Credit. "But Ford appears to have more operating momentum. If it can keep turning that momentum into cash, it should be able to reach its goal of zero net debt this year."

Mercury wind-down smooth

Ford said the wind-down of Mercury is going smoothly and that it hasn't been sued by any dealers. Ford spent $229 million during the second quarter on those efforts, which is less than half the total Ford expects it will cost to bring Mercury to a close.



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