Detroit: Ford Motor Co posted stronger-than-expected quarterly earnings and said it was on track for “solid profits” in 2010 and higher profits in 2011, sending its shares up 4% in pre-market trade.
Ford lowered the top end of its range for US auto industry sales for 2010, citing in part a slow but sustainable recovery in the US economy.
“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,” chief executive Alan Mulally said in a statement.
Second-quarter net profit rose to $2.6 billion from $2.26 billion a year earlier.
Earnings per share fell to 61 cents from 69 cents due to an increase in outstanding shares. Revenue was $31.3 billion, up $4.5 billion.
Earnings from operations, excluding one-time items, were 68 cents a share. On that basis, analysts on average expected 40 cents, according to Thomson Reuters I/B/E/S.
Ford has posted four consecutive quarters of pretax automotive and total company operating profits, despite a severe downturn that pushed US auto industry sales to their lowest levels since the early 1980s.
The automaker reported pre-tax operating profits in all of its automotive regions in the second quarter, including $1.9 billion in North America. Ford Motor Credit posted an $888 million pre-tax operating profit.
The automaker has announced plans to discontinue its Mercury brand and expects to complete the sale of its Swedish brand Volvo to China’s Geely in the third quarter. It intends to focus on its mass market Ford and luxury Lincoln brands.
Ford said it recorded $229 million of personnel and dealer-related charges in the second quarter, primarily for the discontinuation of the Mercury brand.
Ford, the only large US automaker to avoid bankruptcy in 2009, borrowed more than $23 billion in 2006 to fund its turnaround, leaving it with a heavier debt load than rivals General Motors Co and Chrysler.
Ford trimmed automotive debt by $7 billion in the second quarter and said it expects to continue debt reduction. It ended the quarter with $27.3 billion of automotive debt.
Automotive operating cash flow was $2.6 billion in the second quarter, and Ford ended the quarter with gross cash in the automotive business of $21.9 billion after executing debt-reduction plans.
Ford said it expected to move from a net automotive debt position to a net cash position by the end of 2011, eliminating that $5.4 billion deficit between cash and debt.
Ford cut the top of its US auto industry sales forecast for 2010. It now expects industrywide sales of 11.5 million to 12 million vehicles, including medium and heavy trucks, down from a prior forecast of 11.5 million to 12.5 million.
“I’d say the consumer is still a little bit skittish, but I’d say July is off to a better start,” chief financial officer Lewis Booth told reporters.
The automaker expects to increase its US market share overall and in retail sales in 2010.
Ford shares were up 49 cents, or 4%, at $12.58 in premarket trading.