Ford Motors Profits Improve $3.34B
|Topics: Ford Motor Company
July 23, 2010
Ford Motor Co. (F) posted a profit of $2.7 billion or 68 cents per share (before particular items that include sales of Volvo cars, among other things) in the second quarter of the year, far outdoing the Zacks Consensus Estimate of 40 cents per share. The profit improved $3.34 billion from a loss of $638 million or 21 cents per share (before similar adjustments) in the second quarter of 2009.
Sales in the quarter appreciated 17% to $31.3 billion, higher than the Zacks Consensus Estimate of $29.5 billion. Apart from sales of Volvo cars in 2009, sales surged 31%. Ford Motors strong results were attributable to better performance by its Automotive operations around the world, driven by strength of new products.
Ford Motors Results by Segment
The Ford Motors segment witnessed a 22% increase in revenues to $28.8 billion. The pre-tax operating profit was $2.1 billion in contrast with a loss of $1.1 billion a year ago. The development reflected favorable net pricing, higher volume and mix.
In North America, revenues jumped 58% to $16.9 billion. The region showed a pre-tax operating profit of $1.9 billion compared with a loss of $899 million a year ago. The change for the better for Ford Motors was attributable to higher volume, mix and favorable net pricing.
In South America, Ford Motors revenues shot up 44% to $2.6 billion. Pre-tax operating profit in the region was $285 million compared with $86 million a year ago. The increase was due to favorable net pricing and exchange rates as well as higher volume and mix, partially offset by increases in commodity and structural costs.
In Europe, Ford Motors revenues scaled up 7% to $7.5 billion. Pre-tax operating profit was $322 million compared with $57 million a year ago. The improvement was attributable to lower operational costs, partially offset by unfavorable net pricing.
In Asia-Pacific & Africa, Ford Motors revenues surged 50% to $1.8 billion. Pre-tax operating profit was $113 million compared with a loss of $27 million a year ago. The improvement reflected higher industry volumes, lower operational costs and favorable exchange rate.
Ford?s Other Automotive -- consisting mainly of interest and financing-related costs -- revealed a pre-tax loss of $551 million in the quarter due to a net interest expense of $459 million and unfavorable fair market value adjustments of $92 million, associated with the automaker?s investment in Japan?s Mazda Motors.
Ford Motors Financial Services
The Financial Services for Ford Motors segment reported an increase in pre-tax operating profit to $875 million from $595 million in the previous year. Ford Credit showed a rise in pre-tax operating profit to $888 million from $646 million a year ago.
The increase for Ford Motors was attributable to a lower provision for credit losses and lower residual losses due to higher auction values, partially offset by the non-recurrence of net gains due to unhedged currency exposures in the previous year as well as lower volume.
Ford Motors Financial Position
Ford had cash and marketable securities of $21.9 billion as of June 30, 2010 , a marginal improvement from $20.9 billion a year ago. Total Automotive debt fell $6.8 billion to $27.3 billion as of the above period.
The drop in debt caused by a payment of $3.8 billion to the United Auto Workers (UAW) Retiree Medical Benefits Trust and a repayment of $3 billion of Ford?s revolving credit facility. Ford Motors saved more than $470 million in annualized interest expense for Ford.
In the first half of 2010, the Ford Motors Automotive operating-related cash flow improved $7.3 billion to $2.5 billion, driven by higher profit and favorable changes in working capital. Ford Motors capital expenditures improved by $200 million to $1.9 billion during the above period.
Ford Motors Guidance
In the upcoming quarter, Ford anticipates production level to increase 126,000 units from the prior year to $1.27 million units. For full year 2010, Ford Motors expects full-year industry volume (including medium and heavy trucks) in the U.S. in the range of 11.5 million units to 12 million units.
In the 19 European markets covered by Ford Motors, the full-year industry volume (including medium and heavy trucks) is anticipated in the range of 14.5 million units to 15 million units, due to a stronger-than-expected first half, offset by a weaker second half.
In 2010, structural costs in the Automotive segment is expected to go up by $1 billion from the previous year in order to support key product launches and other growth plans. The automaker also expects commodity costs to rise by $1 billion for the year. Capital spending is expected to be $4.5 billion as the company continues to focus on its product development plan.
For 2011, Ford Motors xpects its profit to be lower than 2010 due to the occurrence of less favorable factors compared to this year. However, Ford Motors expects to improve its financials from a net debt position to a net cash position.
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