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Ford reports $1B 3Q profit, forecasts faster turnaround

Posted by Nouman Chughtai on Monday, November 2, 2009

Ford Motor has come a long way from the nearly $30 billion in losses it racked up between 2006 and 2008.


Drive on: Ford profit report provides glint of optimism in downtrodden auto industry
After closing more than 10 plants and slashing 45% of its workforce in its long ailing North American division since 2006, the automaker on Monday reported net income of $997 million, or 29 cents a share, compared with a net loss of $161 million, or 7 cents a share, a year ago.
Even the company's long-struggling North American division reported a pretax operating profit of $357 million — its first profitable quarter since the first quarter of 2005. The company improved its cash position by $2.8 billion, ending the quarter with $23.8 billion in cash.
What's more, Ford (F)said it "expects to be solidly profitable in 2011," excluding special onetime charges, "with positive operating-related cash flow."
Ford said a strong customer response to its new cars and trucks, cost reductions and improved results at its financing and lending arm, Ford Motor Credit, contributed to the result.


The result was especially impressive because Ford's third-quarter revenue was $30.9 billion, down $800 million from the same period a year ago.
"Our third-quarter results clearly show that Ford is making tremendous progress despite the prolonged slump in the global economy," Ford President and CEO Alan Mulally said in a statement.
Ford reported an operating profit of $1.1 billion, excluding special items, during the third quarter, easily outperforming Wall Street's expectations. An operating profit is a company's earnings from ongoing operations before interest and taxes. This is the company's first profit on a pretax basis since the first quarter of 2008.
Analysts, on average, were expecting Ford to report a loss of 12 cents a share, before onetime charges, for the three months ending Sept. 30, according to estimates from Thomson One Analytics.
Lewis Booth, Ford's CFO and executive vice president, said Monday that the company's sales boost was partly driven by government incentive programs in both the United States and Europe that lifted overall industry sales. However, he said Ford expects to report a positive cash flow again for the last three months of this year, too.
"It's a huge deal," Booth said. "We expect to have positive cash flow in the fourth quarter."
Booth declined to comment on the rejection of proposed modifications to the company's labor agreement with the UAW, saying Ford plans to wait until the UAW announces official results of the vote. However, he said the company was pleased that it reached an amended labor agreement with the CAW.
The Dearborn automaker's credit arm, Ford Motor Credit, also reported an improved performance. Ford Credit reported a net income of $427 million compared with a profit of $95 million a year ago. Ford said the improvement was due to better resale values of leased vehicles and lower operating costs.

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