Ford Posts 6th Straight Profitable Quarter - 3rd quarter 2010, $1.7 billion.

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DEARBORN, Mich. — The Ford Motor Company said on Tuesday that it earned $1.7 billion in the third quarter and that it expected to have zero net debt by the end of December, one year ahead of forecast.
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It was the sixth consecutive profitable quarter and the best third quarter in more than 20 years for Ford, which has been gaining momentum because of popular new cars and crossover vehicles, even as the overall market and the economy remain relatively weak.

Ford, the only one of the three Detroit automakers to avoid bankruptcy and not accept government bailout assistance, has earned about $6.4 billion so far in 2010, just two years since a $14.6 billion annual loss that was the biggest in its history.

Its third-quarter profit was equal to 43 cents a share, compared to 29 cents a share a year earlier, when it earned $997 million.

On an operating basis, excluding taxes and special items, Ford earned $2.1 billion, or 48 cents a share, up from $1 billion, or 26 cents a share, in the third quarter of 2009. On that basis, analysts had expected earnings of 38 cents.

“This was another strong quarter and we continue to gain momentum with our One Ford plan,” the chief executive, Alan R. Mulally, said in a statement. “Delivering world-class products and aggressively restructuring our business has enabled us to profitably grow even at low industry volumes in key regions.”

Ford earned $1.6 billion in North America in the quarter, compared with $314 million in the period a year ago. Automotive operations lost $196 million in Europe but were profitable in other regions.

Revenue declined $1.3 billion to $29 billion, reflecting the sale earlier this year of the company’s Swedish brand, Volvo. Excluding Volvo, now owned by the Chinese carmaker Geely, third-quarter revenue was up $1.7 billion.

Ford executives said all of the company’s business units would be profitable in the fourth quarter and in 2011.

Ford said it paid off $2 billion in debt in September and that it planned to pay its remaining obligation to the United Automobile Workers union’s retiree health care trust — $3.6 billion — on Friday, in cash. Ford had not been required to satisfy its debt to the union trust until 2022.

In all, the company expects to save about $800 million a year in interest as a result of the debt-reduction actions it has competed or announced this year, including a securities conversion offer that it is starting Tuesday.

Ford had $26.4 billion in debt at the end of the quarter, down from $33.6 billion at the end of 2009. Its net debt stood at $2.6 billion, compared to $8.7 billion in December.

The chief financial officer, Lewis W. K. Booth, said debt reduction would continue to be a priority because a return to an investment-grade credit rating would allow Ford to reduce its borrowing costs.

“We’re working really hard on improving the balance sheet,” Mr. Booth said. Automotive operating-related cash flow was $900 million positive in the quarter. Ford has projected continued positive cash flow and solid profit for the rest of 2010 and in 2011.

Three months ago, Ford said it would eliminate its net debt by the end of 2011. Its high debt load has been a concern to many analysts. The last time Ford had more cash than debt was in mid-2008, before the recession began and auto sales collapsed.

Mr. Booth said Ford did not plan to eliminate all of its debt but that it had “some way to go yet” to reach its ideal debt level, though he would not reveal a specific target.

He said Ford has been able to accelerate its turnaround, without much help from the economy, by not only selling more vehicles but increasing the average price buyers pay.

"Every time we launch a new product, we can see that happening," he said.

Ford’s sales in the United States are up 21 percent this year through September, double the average percentage gain for the industry. Its share of the market rose to 15.9 percent in the third quarter, from 14.6 percent a year earlier.

“Ford sales continue to surge due to a stronger product lineup and improved consumer image,” said Jesse Toprak, vice president of industry trends and insight at TrueCar.com. “Their retail sales are strong and transaction prices have been increasing this year, contributing to an improved bottom-line for the automaker.”

On Monday, Ford said it would create as many as 1,200 engineering and manufacturing jobs by spending $850 million to upgrade at least four Michigan plants through 2013.


By NICK BUNKLEY
Published: October 26, 2010

NEW YORK TIMES