Automaker Ford Motor Co. (F) reported Friday a higher profit in its second quarter, reflecting strong automotive revenue growth, mainly in North America. On an adjusted basis, results turned around from last year, and significantly surpassed market projections. Further, the Dearborn, Michigan-based company said it expects solid financial results in the second half.
Second-quarter net income attributable to the company was $2.60 billion, higher than last year's $2.26 billion, reflecting improved results from each of its major business operations around the world. Meanwhile, earnings per share fell to $0.61 from $0.69 in the year ago quarter.
The latest quarter results included special charges, on a pre-tax basis, of $95 million or $0.02 per share, as a $229 million personnel and dealer-related charges was offset partially by $94 million of favorable held-for-sale adjustments for Volvo and a $40 million gain related to the full pre-payment of Ford's debt obligation .
The prior year results included pre-tax gain of $2.80 billion or $0.90 per share, mainly related to net gains on debt reduction actions.
Excluding special items, net income was $2.70 billion or $0.68 per share, compared to a loss of $638 million or $0.21 per share in the year ago quarter.
On average, 14 analysts polled by Thomson Reuters expected the company to report earnings of $0.40 per share for the quarter. Analysts' estimates typically exclude special items.
Second-quarter revenues climbed to $35 billion from $26.8 billion in the prior year quarter. Revenue, excluding special items, rose to $31.3 billion from $26.8 billion in the year ago quarter. Six analysts had a consensus revenue estimate of $29.79 billion.
The company noted that revenue growth, excluding prior year's Volvo revenue, was over 30% from 2009.
In its preceding first quarter, Ford reported net income attributable to the company of $2.09 billion or $0.50 per share, revenue of $31.6 billion, and revenues excluding special items of $28.1 billion.
In the second quarter, Ford's pre-tax operating profit grew to $2.85 billion from $2.24 billion last year. Pre-tax operating profit excluding special items was $2.94 billion, compared to a loss of $554 million a year ago.
Segment-wise, revenues from Automotive operations increased to $32.5 billion from last year's $23.6 billion. Revenue, excluding special items, were $28.8 billion, higher than $23.6 billion in the previous year. In the quarter, total vehicle wholesales were 1.42 million units, compared with 1.19 million units a year ago.
In the Automotive business operation, Ford North America reported quarterly revenue of $16.9 billion, up from $10.7 billion a year ago. South American revenues climbed to $2.6 billion from $1.8 billion a year ago, and European revenues grew to $7.5 billion from $7 billion last year. In the Asia Pacific Africa region, the company recorded revenue of $1.8 billion, higher than $1.2 billion in the previous year.
The company's financial segment, Ford Motor Credit Company LLC, separately reported second-quarter net income of $556 million, higher than $413 million a year earlier. Total financing revenue was $2.54 billion, lower than last year's $3.23 billion.
Commenting on the results, Lewis Booth, Ford's Chief Financial Officer, said, "Our fundamental business is strong and we continue to gain momentum around the world. Profits improved across our global business operations in the second quarter and we made continued progress in paying down our debt and strengthening our balance sheet."
At the end of the second quarter, the company's automotive debt was $27.3 billion, down $7 billion from last year. The reduction included a $3.8 billion payment by Ford to the UAW Retiree Medical Benefits Trust, and a $3 billion repayment of Ford's revolving credit facility. The company said the debt reduction will save more than $470 million in annualized interest savings.
Rival Toyota Motor Corp. (TM) is slated to release its first-quarter earnings results on August 4. In its preceding fourth quarter, the Japanese automaker had reported net income attributable to Toyota of 112.2 billion yen, compared to loss last year, reflecting strong revenue growth in all regions, except Europe. Consolidated net revenues were 5.28 trillion yen.
For the first six months of fiscal 2010, net income attributable to Ford surged to $4.68 billion or $1.10 per share from $834 million or $0.30 per share in the prior year. Adjusted net income was $4.47 billion or $1.13 per share, compared to last year's loss of $2.43 billion or $0.90 per share. Total first-half revenue grew to $66.6 billion from $51.2 billion a year ago. Revenue excluding special items went up to $59.4 billion from $51.2 billion in 2009.
Ford President and Chief Executive Officer Alan Mulally commented, "We delivered a very strong second quarter and first half of 2010 and are ahead of where we thought we would be despite the still-challenging business conditions. We remain on track to deliver solid profits and positive Automotive operating-related cash flow for 2010, and we expect even better financial results in 2011."
Looking ahead, the company said it expects to have solid financial results in the second half, continuing to exceed the expectations it had earlier this year.
For the third quarter, Ford expects production to be up 126,000 units compared with year-ago levels to 1.27 million units, driven by continued strong demand, maintenance of competitive stock levels, and the non-recurrence of prior-year stock reductions. Sequentially, third-quarter production will be down 174,000 units from the second quarter 2010 production due to planned vacation shutdowns that generally are used to prepare for new models.
In the third quarter, the company projects Ford North America to produce 570 thousand units, and production of 130 thousand units from South America, 356 thousand units from Europe and 213 thousand units from Asia Pacific Africa.
For the fourth quarter also, production will be affected by planned holiday shutdowns and new product changeovers for vehicles such as Focus and Explorer.
According to the company, Ford's third and fourth quarter production schedule is lower than the first half but consistent with the company's strategy to match supply with demand.
Further, Ford expects full-year 2010 U.S. industry volume will be in the range of 11.5 million to 12 million units. In the 19 markets Ford tracks in Europe, full-year industry volume is projected to be in the 14.5 million to 15 million unit range, reflecting a stronger-than-expected first half offset by a weaker second half.
Ford Credit now expects full-year 2010 profits to be higher than its 2009 profits, while the second half will be lower than the first half.
In addition, the company said it projects continued improvement in total company profitability and Automotive operating-related cash flow in fiscal 2011. Ford Credit will continue to be solidly profitable for 2011 but at a lower level than 2010.
The company added that by the end of 2011, it expects to move from an Automotive net debt position to a net cash position
F is currently trading at $12.50, up $0.41 or 3.39%, on a volume of 43 million shares. In the past 52 weeks, shares have traded between $6.61 and $14.57.
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June 05, 2026 16:18 ET A busy week for economic news flow saw a slew of reports being released that reflected the trends in the U.S. labor market. In Europe, economic growth and inflation data gained attention as the European Central Bank and Bank of England head for policy session later in the month. In Asia, the monetary policy session of the Indian central bank was in focus as the country, a major oil importer, reels under the pressures of a weaker rupee and rising inflation.