New York: Ford Motor posted first-quarter earnings of $2.1 billion (Dh7.72 billion), beating analysts' estimates, and boosted its full-year outlook as it reaped the benefits of a recovering auto market and higher prices for cars and trucks.
The profit marked Ford's fourth consecutive quarter of net income, the longest streak since 2005, and compared with a net loss of $1.43 billion a year earlier. Excluding some gains and costs, earnings were 46 cents a share. Ford said it expects a "solid" profit in 2010, a year earlier than Chief Executive Officer Alan Mulally had projected previously.
Ford's 37 per cent surge in US deliveries through March more than doubled the industrywide increase, helping the second- largest US automaker add domestic market share at the fastest pace in 33 years. Ford was alone among its US peers in avoiding bankruptcy in 2009.
Cash cushion
"After all the nonsense that happened in the financial markets, Ford came out in better position than it went in," said Bernie McGinn, president of McGinn Investment Management of Alexandria, Virginia, which owns 320,000 Ford shares. "Their earnings and ability to sell cars will just be enhanced once the economy settles down."
Analysts projected adjusted earnings of 31 cents a share, the average of 12 estimates compiled by Bloomberg.
First-quarter revenue rose 15 per cent to $28.1 billion, Ford said. That compared with the $28 billion average estimate among 7 analysts. Net income was 50 cents a share, exceeding the average estimate of 29 cents from two analysts.
Ford reported $25.3 billion in automotive cash on March 31, down from $25.5 billion at the end of 2009. Cash consumption was $100 million during 2010's first three months, after the company used up $3.7 billion a year earlier.
Borrowing $23 billion in late 2006 gave Ford a cash cushion to withstand losses and develop new models such as the Fiesta subcompact coming this year. The trade-off was a debt load that Mulally has said puts Ford at a competitive disadvantage with General Motors and Chrysler Group, which had their obligations cut in bankruptcy.
Ford said its automotive debt was $34.3 billion, unchanged with the end of 2009.
"Ford now expects to deliver solid profits this year, with positive automotive operating-related cash flow," the company said. Mulally had said previously that Ford would make money on a pretax basis this year and would be "solidly profitable" in 2011.
Mulally has been boosting profit by paring discounts while selling new models with more options that fetch higher prices. Ford may have net income of $3.8 billion this year, according to the average estimate of 4 analysts.
Of 16 analysts rating Ford shares, 8 say buy, 6 advise holding and 2 recommend selling, based on data compiled by Bloomberg. In January 2009, 1 analyst had a buy rating while 8 said hold and 3 said sell.
"Ford's CEO has been a strength," said Efraim Levy, a Standard & Poor's equity analyst in New York who advises holding the shares.
