Ford reported a second-quarter profit of $2.6 billion -- its best performance since the first quarter of 2004. Ford said the quarter, with results higher than analysts had estimated, sets the stage for an even better 2011 as each business unit, including North American automotive operations, showied a significant improvement. "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," said Ford President and CEO Alan Mulally in a statement issued Friday morning.
"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," he added. Ford said by the end of 2011, it expects to have more cash than debt. Ford's huge debtload has been seen as its major challenge for the future.
The company ended the second quarter with automotive debt of $27.3 billion, having paid down $7 billion in the quarter. Ford said it made a $3.8 billion payment to the UAW-run fund for retiree health care and a $3 billion repayment on its revolving credit. The debt reduction will save Ford more than $470 million in annualized interest, the automaker said.
For the first half, Ford earned $4.7 billion in the year's first six months, its largest first-half profit since 1998 and its fifth consecutive profitable quarter, according to Bloomberg News' records.
Ford, however, warned its second half will not be as strong due to lower production volumes, plant shutdowns and costs related to product launches. The automaker launches the all-important next-generation Ford Explorer this fall. The SUV-turned-crossover makes its public debut Monday with a big splash at Ford's world headquarters, the air show in Oshkosh, Wis., and with Ford executives fanning out across the country to promote the new Explorer.
The Explorer launch will be followed by the debut of the next version of the also-significant Ford Focus. In June, the Ford Fiesta went on sale.
Mulally said in a conference call with media and analysts that Ford has "tightened the reins" on its forecast for the U.S. market. Ford expects full-year vehicle sales in the U.S. to come in between 11.5 million to 12 million vehicles, with Ford taking a higher share of that total in 2010.
Highlights from Ford's earnings statement show:
- Ford's second-quarter results improved $338 million from the 2009 second quarter. Pre-tax operating profit totaled $2.9 billion for a $3.5-billion year-over-year improvement and a $932 million improvement from first quarter 2010.
- Ford's automotive operations posted a second quarter pre-tax operating profit of $2.1 billion, a $3.2 billion improvement from second quarter 2009 and $872 million improvement from first quarter 2010.
- Each automotive operation reported a profit and showed improvement from a year ago. Ford North America reported second quarter pre-tax operating profit of $1.9 billion, a
$2.8 billion improvement from second quarter 2009 and $645 million improvement from first quarter 2010.
- Revenue totaled $31.3 billion, up $4.5 billion from second quarter 2009. Excluding Volvo, which is in the process of being sold to Chinese automaker Geely, the revenue increase was $7.4 billion, or over 30 percent from a year ago.
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