Automaker Ford Motor Co. (F) on Thursday reported a profit for the fourth quarter from a loss in the year-ago period, helped by cost-cutting measures and improved market share. The company also reported a profit for fiscal year 2009, it's first full year of profit since 2005.
For fiscal year 2010, the company said it now expects to be profitable on a pre-tax basis excluding special items, with positive Automotive operating-related cash flow. In addition, the company reiterated its outlook for fiscal year 2011.
Dearborn, Michigan-based Ford reported fourth-quarter net income attributable to the company of $868 million or $0.25 per share, compared to loss of $5.98 billion or $2.51 per share in the year-ago period. In the preceding third quarter, Ford reported net income attributable to the company of $997 million or $0.29 per share.
Income from continuing operations for the quarter was $933 million, compared to loss from continuing operations of $6.03 billion in the same period last year.
On an after-tax basis, excluding special items, Ford posted an operating profit for the quarter of $1.57 billion or $0.43 per share, compared with a loss of $3.33 billion or $1.40 per share in the previous-year quarter. On average, thirteen analysts polled by Thomson Reuters expected the company to report earnings of $0.26 per share for the quarter. Analysts' estimates typically exclude special items.
Ford, the only big U.S. automaker not to seek federal assistance, said revenue for the fourth quarter rose 22% to $35.4 billion from $29.0 billion in the prior-year quarter and $30.9 billion in the previous quarter. Analysts expected the company to report revenues of $32.60 billion for the quarter.
Lewis Booth, Ford executive vice president and chief financial officer said, "We delivered very encouraging results in the fourth quarter and for full year 2009 despite severe economic headwinds, although our transformation remains a work in progress. We are committed to staying absolutely focused on executing our plan to deliver profitable growth."
Ford's automotive sector reported a pre-tax fourth-quarter operating profit of $1.07 billion, compared with a loss of $3.34 billion a year ago. The automotive sector revenue for the quarter was $32.6 billion, up from $25.3 billion a year ago and from $27.9 billion in the preceding third quarter. The increase reflects higher volumes and favorable net pricing.
Ford's total vehicle wholesales in the fourth quarter were 1.440 million units, up 26.4% from 1.139 million units a year ago.
Ford reduced its automotive structural costs by $500 million in the fourth quarter. In 2009, Ford achieved $5.1 billion in automotive structural cost reductions, exceeding its full year target of about $4 billion, reflecting primarily lower manufacturing and engineering costs, a reduction in pension and retiree health care expenses, and lower advertising and sales costs as Ford completed major restructuring actions. The company achieved positive Automotive operating-related cash flow of $3.1 billion for the fourth quarter, a remarkable turnaround after drawing down the company's cash reserves for years.
For the fourth quarter, Ford North America reported a pre-tax operating profit of $707 million, compared with loss of $1.9 billion a year ago, primarily driven by higher volume and mix, favorable net pricing, and lower material costs. These positive factors were partially offset by unfavorable exchange. Fourth-quarter revenue for the segment was $15.8 billion, up from $11.3 billion a year ago. Ford increased its market share in the U.S. for the first time since 1995.
North America is a strong market for Ford, and the sales in the region were helped by the U.S. Government's 'Cash for Clunkers' Program. In the recession hit atmosphere, the program was a blessing in disguise for the car makers. Rebate applications worth around $2.877 billion were submitted under the $3 billion provided by Congress to run the program.
On December 12, 2009, Ford's Executive Chairman Bill Ford said in an exclusive interview with RTTNews that he sees improvement in the auto industry heading into 2010, but does not expect a fast recovery.
South America reported a fourth-quarter pre-tax operating profit of $369 million, up from $105 million last year. The increase was mainly due to favorable net pricing as well as higher volume and mix, offset partially by unfavorable exchange. Revenue for the quarter rose to $2.6 billion from $1.7 billion in the year-ago period.
For the fourth quarter, Ford Europe reported a pre-tax operating profit of $305 million, compared with loss of $338 million a year ago, reflecting lower material costs, higher volumes, favorable net pricing and structural cost reductions. Fourth-quarter revenue increased to $8.7 billion from $7.6 billion a year ago.
At Ford Asia Pacific Africa, fourth-quarter pre-tax operating profit was $19 million, compared with loss of $208 million a year ago, primarily reflecting favorable net pricing, China joint venture profits, and structural cost reductions. Revenue for the quarter increased to $1.6 billion from $1.4 billion a year ago.
For the fourth quarter, Volvo reported a pre-tax operating loss of $32 million, compared to a loss of $736 million a year ago. The difference stems from continued progress on cost reductions, favorable exchange, and higher volume and mix, favorable net pricing, and lower material costs. Revenue for the quarter was $3.9 billion, up from $3.3 billion last year. Volvo in the process of being sold to Geely Holding Group Co. Ltd, a privately-owned Chinese automotive group.
The Financial Services division reported a pre-tax operating profit of $683 million for the quarter, compared with a loss of $384 million in the same period last year.
Ford Motor Credit's pre-tax operating profit for the quarter was $696 million, compared to loss of $372 million in the previous year, reflecting lower depreciation expense for leased vehicles due to higher auction values and a lower provision for credit losses, offset partially by lower volume. The unit's fourth-quarter net income was $440 million, compared to loss of $228 million in the same period last year. Total financing revenues for the quarter were $2.84 billion down from $3.79 billion in the year ago quarter. On December 31, 2009, Ford Credit's on-balance sheet net receivables totaled $93 billion, compared to $116 billion at year-end 2008.
Other Financial Services reported a pre-tax operating loss that widened to $13 million from $12 million a year ago.
During the fourth quarter, Ford issued $2.9 billion in a convertible debt offering and also reached an agreement with its revolving lenders to extend the maturities of $7.9 billion of debt commitments to 2013 from 2011.
Ford reported a profit for fiscal year 2009, marking the company's first full year of profit since 2005. Ford reported net income attributable to the company of $2.70 billion or $0.86 per share for the year, compared to a loss of $14.77 billion or $6.50 per share in the previous year.
For fiscal year 2009, Ford Motor Credit's net income was $1.27 billion, compared to net loss of $1.54 billion a year ago. On a pre-tax basis, Ford Credit earned $2 billion in the year, compared with loss of $2.6 billion in the previous year. Excluding the $2.1 billion impairment charge for North America operating leases in the second quarter of 2008, Ford Credit incurred a pre-tax loss of $473 million in the previous year. Total financing revenue for the latest year declined to $12.54 billion from $16.42 billion a year ago.
The results were driven in part by favorable net pricing, structural cost reductions, net gains on debt reduction actions and strong Ford Credit results.
Income from continuing operations for the year was $2.94 billion, compared to a loss from continuing operations of $14.56 billion last year.
On an after-tax basis, excluding special items, Ford's operating profit for the year was $8 million or breakeven per share, compared to operating a loss of $7.27 billion or $3.20 per share a year ago. Analysts expected the company to report a loss of $0.31 per share for the year.
Revenue for the year declined 14% to $118.3 billion from $138.1 billion in the prior year. Analysts had a consensus revenue estimate for the year of $118.45 billion.
Ford's total vehicle wholesales in the year were 4.817 million units, down 10.9% from 5.407 million units a year ago.
Alan Mulally, Ford President and CEO, said, "While we still face significant business environment challenges ahead, 2009 was a pivotal year for Ford and the strongest proof yet that our One Ford plan is working and that we are forging a path toward profitable growth by working together as one team, leveraging our global scale. In every part of the world, we are providing customers with great products, building a stronger business and contributing to a better world. Our progress has helped us gain market share in most of our major markets."
Ford finished fiscal year 2009 with $25.5 billion in Automotive gross cash, up from $23.8 billion at the end of the third quarter of 2009. Automotive operating-related cash outflow, or cash burn, for the full year was $300 million negative, an improvement of $19.2 billion over 2008.
Automotive debt, which excludes Ford Motor Credit, was $34.3 billion at the end of the year, up from $26.9 billion at the end of the preceding third quarter.
As a result of the company's full-year profit, Ford said it will pay profit sharing to 43,000 eligible U.S. hourly employees consistent with the 2007 UAW-Ford Collective Bargaining Agreement. The average amount is expected to be approximately $450 per eligible employee.
However, the company said it will not pay salaried employees bonuses for 2009 although they are eligible for merit increases this year. The company also reinstated its matching 401(k) program on January 1, 2010.
Ford increased its first-quarter production forecast for North America, saying it will now build about 570,000 vehicles compared with its earlier estimate of 550,000 units.
Looking ahead to fiscal year 2010, Ford expects capital spending in a range of $4.5 billion-$5 billion. The planning assumption excludes Volvo and joint ventures that will be deconsolidated with the adoption of the new accounting standard effective Jan. 1, 2010.
Ford said that its expects to reach a definitive sale agreement with Geely for Volvo Cars in the first quarter of 2010, with closing of the sale likely in the second quarter of 2010.
The company expects U.S. full year industry sales to be in the range of 11.5 million-12.5 million units, including medium and heavy trucks. The company also said it expects its full year U.S. total market share and its share of the U.S. retail market to be equal or improved compared with 2009.
Meanwhile, Ford Credit said it expects to be profitable in 2010, but lower than the previous year, based on lower average receivables and non-recurrence of certain favorable factors in the prior year.
In addition, Ford reiterated its outlook for fiscal year 2011. The company said it remains on track to be solidly profitable for the year on a pre-tax basis excluding special items, with positive automotive operating-related cash flow. Analysts expect the company to report earnings of $0.55 per share for the year.
Ford announced earlier this week that it will produce the next-generation Ford Explorer SUV at the company's Chicago assembly Plant beginning in the fourth quarter of this year. Ford will invest about $400 million in its Chicago manufacturing facilities to launch the production of the new Ford Explorer. The company stated that the new Explorer will deliver at least 25% better fuel economy than the current model.
The company also will add 1,200 job opportunities for a second production shift at the Chicago assembly plant and increase production at the nearby Chicago stamping plant.
Amongst peers, Toyota Motor Corp. (TM) is slated to announce its third-quarter results on February 4. The Japanese automaker recently said that it sees 6% year-over-year sales growth for 2010 to 8.27 million vehicles from 7.81 million vehicles in the prior year. Toyota also expects sales in the Japanese region to improve 7% to 2.13 million vehicles and overseas sales to grow 6% to 6.14 million vehicles.
In Thursday's regular trading, F is trading at $11.52, down $0.03 or 0.26% on a volume of 95.09 million shares. In the past 52 weeks, the stock has been trading in a range of $1.50-$12.14.
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