Ford posts q3 2009 net income of $1 billion image

Ford Motor Co., the only major U.S. automaker to avoid bankruptcy, posted net income of $997 million in the third quarter and its first operating profit since early 2008. Ford said it expects to be “solidly profitable” in 2011.

On an adjusted basis, Ford reported a quarterly pretax profit of $1.1 billion, or 26 cents a share, compared with a year-earlier loss of $3 billion or $1.32. Ford beat the 20 cents a share adjusted loss it was forecast to report by an average of 11 analysts surveyed by Bloomberg.

Financial Results Summary

Third Quarter

First Nine Months

2009

O/(U) 2008

2009

O/(U) 2008

Wholesales (000)+ 1,232 57 3,377 (891)
Revenue (Bils.) + $       30.9 $       (0.8) $       82.9 $     (26.2)
Operating Results +
Automotive Results (Mils.) $        446 $     3,385 $   (2,493) $        523
Financial Services (Mils.) 661 502 1,194 1,305
Pre-Tax Results (Mils.) $     1,107 $    3,887 $   (1,299) $    1,828
After-Tax Results (Mils.)+++ $        873 $     3,882 $   (1,557) $     2,381
Earnings Per Share +++ $      0.26 $      1.58 $     (0.54) $      1.22
Special Items Pre-Tax (Mils.) $        108 $   (2,099) $     3,265 $     9,484
Net Income/(Loss) Attributable to Ford
After-Tax Results (Mils.) $        997 $     1,158 $     1,831 $   10,619
Earnings Per Share $       0.29 $      0.36 $      0.61 $      4.55
Automotive Gross Cash (Bils.) ++ $       23.8 $         4.9 $       23.8 $         4.9

Ford’s North American operations posted a pre-tax operating profit of $357 million, its first quarterly profit since the first quarter of 2005. Ford South America, Ford Europe and Ford Asia Pacific Africa also posted pre-tax operating profits in the third quarter.

“Our third quarter results clearly show that Ford is making tremendous progress despite the prolonged slump in the global economy,” said Ford President and CEO Alan Mulally. “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.”

Ford’s third quarter revenue was $30.9 billion, down $800 million from the same period a year ago. Automotive revenue is up $100 million from a year ago. This improvement was offset by a decrease in Ford Credit’s revenue reflecting a decline in receivables.

Ford reduced its Automotive structural costs by $1 billion in the quarter, largely driven by lower manufacturing and engineering costs, which included benefits from improved productivity, personnel reduction actions primarily in North America and Europe, and progress on implementing its common global platforms and product development processes. Through the first nine months, Ford has achieved $4.6 billion in Automotive structural cost reductions, exceeding its full-year 2009 target of $4 billion.

Ford finished the third quarter with $23.8 billion in Automotive gross cash, compared with $21 billion at the end of the second quarter of 2009. Automotive operating-related cash flow was $1.3 billion positive during the third quarter of 2009, an improvement of $2.3 billion from the second quarter 2009. Automotive operating-related cash flow was $3.4 billion negative during the first nine months.

“The Ford team delivered another solid quarter of results with strong contributions from all our business regions,” said Lewis Booth, Ford executive vice president and chief financial officer. “Positive cash flow, a stronger balance sheet and a third quarter operating profit are evidence that Ford is meeting the global economic challenges.”

AUTOMOTIVE SECTOR

Automotive Sector*

Third Quarter

First Nine Months

2009

O/(U) 2008

2009

O/(U) 2008

Wholesales (000) 1,232 57 3,377 (891)
Revenue (Bils.) $      27.9 $       0.1 $      73.3 $    (23.6)
Pre-Tax Results (Mils.) $        446 $    3,385 $   (2,493) $        523
*excludes special items

For the third quarter of 2009, Ford’s Automotive sector reported a pre-tax operating profit of $446 million, compared with a pre-tax loss of $2.9 billion a year ago.  The improvement primarily reflects favorable net pricing, structural cost reductions, lower material costs and improved market share, offset partially by unfavorable exchange and lower industry volumes.

Worldwide Automotive revenue in the third quarter was $27.9 billion, up $100 million from a year ago.  The increase is more than explained by favorable net pricing and higher volumes, primarily in North America, offset partially by unfavorable exchange. Total vehicle wholesales in the third quarter were 1,232,000, compared with 1,175,000 units a year ago.

Automotive structural cost reductions in the third quarter totaled $1 billion, including $500 million in North America. Manufacturing and engineering costs were $500 million lower, largely reflecting the continued benefits of improved productivity, personnel reduction actions primarily in North America and Europe, and progress on the implementation of Ford’s common global platforms and product development processes.  Pension and retiree health care costs were lower, reflecting the effect of the UAW Retiree Health Care VEBA agreement.  Overall, Ford reduced Automotive structural costs by $4.6 billion during the first nine months.

Net pricing was $1.9 billion favorable, primarily explained by higher U.S. net pricing, reflecting the success of new products, a continued disciplined approach on incentives and selective top-line pricing.

North America: For the third quarter, Ford North America reported a pre-tax operating profit of $357 million, compared with a loss of $2.6 billion a year ago.  The improvement was primarily explained by favorable net pricing, lower material costs, structural cost reductions, favorable series mix and improved market share, offset partially by unfavorable exchange and lower U.S. industry volume.  Third quarter revenue was $13.7 billion, up from $10.8 billion a year ago.

South America: For the third quarter, Ford South America reported a pre-tax operating profit of $247 million, compared with a profit of $480 million a year ago.  The decrease is more than explained by unfavorable exchange, primarily in Brazil and Argentina. Third quarter revenue was $2.1 billion, down from $2.7 billion a year ago.

Europe: For the third quarter, Ford Europe reported a pre-tax operating profit of $193 million, compared with a profit of $69 million a year ago.  The improvement was more than explained by structural cost reductions, lower material costs and favorable net pricing, offset partially by unfavorable volume and mix and exchange. Third quarter revenue was $7.6 billion, down from $9.7 billion a year ago.

Asia Pacific Africa: For the third quarter, Ford Asia Pacific Africa reported a pre-tax operating profit of $27 million, compared with a profit of $4 million a year ago.  The increase primarily reflects favorable net pricing, China joint venture profits, and cost reductions, offset partially by unfavorable exchange. Third quarter revenue was $1.5 billion, down from $1.7 billion a year ago.

Volvo: Volvo continues to be reported as an ongoing operation. The effects of “held-for-sale” accounting-related adjustments are reported as special items. For the third quarter, Volvo reported a pre-tax operating loss of $135 million, compared with a loss of $458 million a year ago.  The improvement is more than explained by continued progress on cost reductions, favorable exchange, and higher volume and mix.  Third quarter revenue was $3 billion, up from $2.9 billion a year ago.  Also, as announced last week, Ford confirmed Geely as the preferred bidder in the ongoing discussions concerning the possible sale of Volvo Cars.

Other Automotive: Other Automotive, which consists primarily of interest and financing-related costs, was a third quarter pre-tax loss of $243 million.

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