Ford Posts an Unexpected Profit of $997 Million
DETROIT ??? The Ford Motor Company on Monday posted a surprise third-quarter profit of $997 million and said it had its first profitable quarter in North America in more than four years.
The carmaker also said it increased its cash reserves by $2.8 billion during the quarter, ending September with $23.8 billion.
For all of 2009, Ford, the only Detroit automaker to avoid bankruptcy this year, has had a profit of more than $1.8 billion. It reported $834 million of income in the first half of the year.
Its goal has been to break even or earn a full-year profit by 2011. On Monday the company said in a statement that it ???now expects to be solidly profitable in 2011, excluding special items, with positive operating-related cash flow.??? It did not indicate whether a fourth-quarter or full-year profit is expected this year.
Earnings of $357 million in North America broke a streak of 17 consecutive quarterly losses in that region. In the third quarter of 2008, Ford lost $2.6 billion in North America, where sales by all automakers have fallen significantly.
???Our third quarter results clearly show that Ford is making tremendous progress despite the prolonged slump in the global economy,??? Ford???s chief executive, Alan R. Mulally, said in the statement. ???Our solid product lineup is leading the way in all markets. While we still face a challenging road ahead, our One Ford transformation plan is working and our underlying business continues to grow stronger.???
The company posted an after-tax operational profit of $873 million, or 26 cents a share, beating even the most optimistic of forecasts by Wall Street analysts. Its overall profit is equal to 29 cents a share.
The profit occurred even as third-quarter revenue fell 3 percent, to $30.9 billion,. The company said it now expected to reduce its annual structural costs by $5 billion this year, $1 billion more than its original target.
???Positive cash flow, a stronger balance sheet and a third-quarter operating profit are evidence that Ford is meeting the global economic challenges,??? Lewis Booth, Ford???s chief financial officer, said in the company???s statement.
Also on Monday, the United Automobile Workers union is expected to announce that its members soundly rejected a deal to help Ford further cut its labor costs. The deal generally would have matched concessions that workers at Chrysler and General Motors approved in the spring.
Ford workers ratified a deal in March that saves the company an estimated $500 million a year, but this time many expressed anger at being asked to make more sacrifices at a time when the company???s finances and market share are improving.
But Ford easily won approval of a separate deal from its 7,000 union workers in Canada over the weekend. The Canadian Automobile Workers union said 83 percent voted in favor of that deal, which freezes wages until 2012 and allows Ford to close its 41-year-old assembly plant in St. Thomas, Ontario.
The U.A.W. deal would have frozen wages for newly hired workers until 2015, combined some job classifications and barred the union from going on strike to demand higher pay or benefits. In rejecting the deal, workers gave up a $1,000 bonus that Ford would have paid them in March.
Many in the U.A.W. undoubtedly were affected by Ford???s efforts to portray itself as different from G.M. and Chrysler since those companies each borrowed billions of dollars from the federal government and filed for Chapter 11 protection.
Ford has been having more success than its cross-town rivals at attracting customers, and its newest vehicles are winning commendations from third-party sources like the magazine Consumer Reports, which last week declared Ford???s quality to be ???as dependable ??? or better than ??? some of the industry???s best.???
The company???s sales in the United States are down 22 percent this year through September, the smallest decline among the six largest automakers; the industry is down 27 percent over all.
As recently as two years ago, Ford was widely regarded as the laggard of the Detroit Three. (That unwelcome distinction now is held by Chrysler, which intends to outline its future plans with its Italian partner, Fiat, on Wednesday.)
Last year, Ford lost $14.6 billion, the most in its history. Mr. Mulally initially joined the leaders of G.M. and Chrysler in pleading with members of Congress to aid their companies, but Ford later decided to forgo emergency loans.
Despite its improvements, Ford remains heavily in debt. It borrowed $23.5 billion in 2006, a move initially viewed as an ominous sign of its future prospects but which turned out to be extremely fortunate after the credit markets collapsed.
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DETROIT ??? The Ford Motor Company on Monday posted a surprise third-quarter profit of $997 million and said it had its first profitable quarter in North America in more than four years.
The carmaker also said it increased its cash reserves by $2.8 billion during the quarter, ending September with $23.8 billion.
For all of 2009, Ford, the only Detroit automaker to avoid bankruptcy this year, has had a profit of more than $1.8 billion. It reported $834 million of income in the first half of the year.
Its goal has been to break even or earn a full-year profit by 2011. On Monday the company said in a statement that it ???now expects to be solidly profitable in 2011, excluding special items, with positive operating-related cash flow.??? It did not indicate whether a fourth-quarter or full-year profit is expected this year.
Earnings of $357 million in North America broke a streak of 17 consecutive quarterly losses in that region. In the third quarter of 2008, Ford lost $2.6 billion in North America, where sales by all automakers have fallen significantly.
???Our third quarter results clearly show that Ford is making tremendous progress despite the prolonged slump in the global economy,??? Ford???s chief executive, Alan R. Mulally, said in the statement. ???Our solid product lineup is leading the way in all markets. While we still face a challenging road ahead, our One Ford transformation plan is working and our underlying business continues to grow stronger.???
The company posted an after-tax operational profit of $873 million, or 26 cents a share, beating even the most optimistic of forecasts by Wall Street analysts. Its overall profit is equal to 29 cents a share.
The profit occurred even as third-quarter revenue fell 3 percent, to $30.9 billion,. The company said it now expected to reduce its annual structural costs by $5 billion this year, $1 billion more than its original target.
???Positive cash flow, a stronger balance sheet and a third-quarter operating profit are evidence that Ford is meeting the global economic challenges,??? Lewis Booth, Ford???s chief financial officer, said in the company???s statement.
Also on Monday, the United Automobile Workers union is expected to announce that its members soundly rejected a deal to help Ford further cut its labor costs. The deal generally would have matched concessions that workers at Chrysler and General Motors approved in the spring.
Ford workers ratified a deal in March that saves the company an estimated $500 million a year, but this time many expressed anger at being asked to make more sacrifices at a time when the company???s finances and market share are improving.
But Ford easily won approval of a separate deal from its 7,000 union workers in Canada over the weekend. The Canadian Automobile Workers union said 83 percent voted in favor of that deal, which freezes wages until 2012 and allows Ford to close its 41-year-old assembly plant in St. Thomas, Ontario.
The U.A.W. deal would have frozen wages for newly hired workers until 2015, combined some job classifications and barred the union from going on strike to demand higher pay or benefits. In rejecting the deal, workers gave up a $1,000 bonus that Ford would have paid them in March.
Many in the U.A.W. undoubtedly were affected by Ford???s efforts to portray itself as different from G.M. and Chrysler since those companies each borrowed billions of dollars from the federal government and filed for Chapter 11 protection.
Ford has been having more success than its cross-town rivals at attracting customers, and its newest vehicles are winning commendations from third-party sources like the magazine Consumer Reports, which last week declared Ford???s quality to be ???as dependable ??? or better than ??? some of the industry???s best.???
The company???s sales in the United States are down 22 percent this year through September, the smallest decline among the six largest automakers; the industry is down 27 percent over all.
As recently as two years ago, Ford was widely regarded as the laggard of the Detroit Three. (That unwelcome distinction now is held by Chrysler, which intends to outline its future plans with its Italian partner, Fiat, on Wednesday.)
Last year, Ford lost $14.6 billion, the most in its history. Mr. Mulally initially joined the leaders of G.M. and Chrysler in pleading with members of Congress to aid their companies, but Ford later decided to forgo emergency loans.
Despite its improvements, Ford remains heavily in debt. It borrowed $23.5 billion in 2006, a move initially viewed as an ominous sign of its future prospects but which turned out to be extremely fortunate after the credit markets collapsed.
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