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NINETY EIGHT REGENCY

FORD RECOVERY ONE YEAR AHEAD OF SCHEDULE, DIVIDENDS STILL ‘SOME WAY OFF’

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FORD RECOVERY ONE YEAR AHEAD OF SCHEDULE, DIVIDENDS STILL ‘SOME WAY OFF’

2011 Ford Explorer Site

By Mark Kleis

Shortly after Ford announced a record profit for last quarter, talks turned to the long-term picture, analyzing Ford’s cash position and how far along it was on its road to financial recovery.

One of the key changes that investors look to when considering the strength of a company is the performance of its stock, including if dividends are being issued, and if so, for how much. Ford’s top executive when it comes to the company’s finances, CFO Lewis Booth, said that the automaker is “some way off yet,” in regards to restoring stock dividends. Booth added, “We still have a lot of work to do on our balance sheet,” according to a Bloomberg report.

The Blue Oval’s money man went on to explain that Ford’s focus is currently set on improving its balance sheet, and despite posting a $1.69 billion net profit from its automotive operations last quarter, and an additional $497 million from its credit arm, the automaker wants to continue paying down its debt with its available funds before returning dividends.

2010 progress surpasses estimates

Ford has managed to pay down $10.8 billion in obligations so far in 2010, bringing its debt to $22.8 billion – just $2.5 billion more than its current cash reserve.

Furthermore, later today Ford will finish paying down the remaining $3.6 billion owed to a union retiree health-care trust – in cash. By making this payment with cash, the automaker can avoid further stock issuing, helping to preserve the value of its stock.

All told, Ford expects to be able to save roughly $800 million annually that would have otherwise been spent on interest due to the debt it paid down in 2010. Referring to that figure, Booth said on Thursday that the $800 is “a pretty good car program.”

When will dividends return?

Bloomberg analysts estimate that Ford will begun issuing a quarterly dividend of five cent per share in 2012. This estimate coincides with an estimate by John Murphy of Bank of America’s Merrill Lynch, who expected the return of dividends “by 2012 at the latest.”

Murphy currently rates Ford’s stock as a “buy,” and even suggested that the Dearborn-based automaker’s balance sheet is in fact “stronger than generally perceived.”

link:

http://www.leftlanenews.com/ford-recovery-one-year-ahead-of-schedule-dividends-still-some-way-off.html

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