Ford posts net income of $2.1 billion in first quarter

Ford Motor Company on April 27 reported first quarter 2010 net income of $2.1 billion, or 50 cents per share, a $3.5 billion improvement from first quarter 2009, as strong selling new products, improvements in its global Automotive operations, and higher profits at Ford Credit boosted results.

Excluding special items, Ford reported pre-tax operating profit of $2 billion, or 46 cents per share, an improvement of $4 billion from a year ago.  It marked Ford’s highest quarterly pre-tax operating profit in six years.

Ford North America posted first quarter pre-tax operating profit of more than $1.2 billion, a $1.9 billion improvement from first quarter 2009, as a result of higher volume and mix and favorable net pricing.  Ford operations in South America, Europe and Asia Pacific Africa as well as Ford Credit also posted pre-tax operating profits in the first quarter and improved results over the same period in 2009.

“The Ford team around the world achieved another very solid quarter, and we are delivering profitable growth,” said Ford president and CEO Alan Mulally. “Our plan is working, and the basic engine that drives our business results – products, market share, revenue and cost structure – is performing stronger each quarter, even as the economy and vehicle demand remain relatively soft.”

At the end of March, Ford entered into a definitive agreement to sell Volvo and related assets to Zhejiang Geely Holding Group for $1.8 billion, subject to customary purchase price adjustments. The sale is expected to close in the third quarter of 2010. As a result of the agreement to sell Volvo, all of Volvo’s 2010 results are being reported as special items and excluded from Ford’s operating results; 2009 data include Volvo.

Ford’s first quarter revenue was $28.1 billion, up $3.7 billion from the same period a year ago. If Volvo had been excluded from 2009, Automotive revenue would have increased by $7 billion, or more than 30 percent.

Ford finished the first quarter with $25.3 billion in Automotive gross cash, an increase of $400 million since year end. Automotive operating-related cash outflow was $100 million during the first quarter, as Automotive pre-tax operating profit was more than offset by changes in working capital and other timing differences, as well as a $300 million payment to Ford Credit reflecting up-front subvention payment. The company ended the first quarter with total Automotive debt of $34.3 billion, an increase of $700 million compared to year-end 2009.

On April 6, Ford paid down $3 billion of the drawn amount of its 2013 revolving credit facility. This payment has reduced Automotive gross cash and debt by $3 billion, which will be reflected on Ford’s second quarter 2010 balance sheet. The action did not affect Automotive liquidity, as the repaid amounts remain available for borrowing.

Special items were a favorable pre-tax amount of $125 million in the first quarter of 2010, or 7 cents per share. Ford recorded a $188 million gain related to held-for-sale adjustments for Volvo, which was offset partially by $63 million of global personnel reductions and dealer-related charges.  If Volvo had continued to be reported as an ongoing operation, Ford would have reported a first quarter pre-tax operating profit of $49 million for Volvo.

“We are seeing the benefits of our One Ford plan around the world,” said Lewis Booth, Ford executive vice president and chief financial officer. “All of our business operations – North America, South America, Europe, Asia Pacific Africa and Ford Credit – were not only profitable, but also showed substantially improved results over a year ago.”

• Increased U.S. market share by 2.7 percentage points to 16.6 percent and a 14.1 share of the retail market, fueled by strong sales of Fusion, F-150, Taurus and Focus
• Achieved market leadership in Canada, boosting market share to 15.5 percent and increasing sales by 29 percent
• Increased sales by 14 percent in the South American region and sold a record 88,000 vehicles in Brazil
• Increased sales in Europe and achieved a 9.4 percent market share. In March, Ford was the best selling brand in Europe for the 19 markets we track
• Ford Asia Pacific Africa increased sales by 39 percent as the Fiesta gained momentum in several markets
• Ford, Lincoln and Mercury vehicles achieved the highest customer satisfaction and the fewest number of “things gone wrong” among all full-line manufacturers, according to the first quarter Global Quality Research System survey for the U.S.
• Revealed new global Ford Focus, which goes on sale early next year in North America and Europe, and in 2012 for Asia
• Revealed 2011 Ford Edge and Lincoln MKX, which reach showrooms this fall and will be the first vehicles to feature MyFord Touch and MyLincoln Touch
• Unveiled the Lincoln MKZ Hybrid, expected to be America’s most fuel-efficient luxury sedan
• Announced partnership with Microsoft to use Microsoft Hohm as a platform to help future owners of Ford’s electric vehicles manage energy use
• Began production of Figo small car for India; received 10,000 orders in first month on the market
• Began production of the next-generation F-Series Super Duty lineup with new fuel-efficient diesel and gasoline engines
• Announced Ford’s electric vehicles plan is extending to Europe with plans to launch five full-electric or hybrid vehicles for European customers by 2013
• Announced plan to increase investment in Brazil and Argentina by $450 million to more than $2.6 billion by 2015
• Announced  $2.3 billion investment in U.K. manufacturing facilities over the next five years to support production of low-carbon emission vehicles
• Announced $400 million investment in South Africa to support production of Ford’s next-generation compact pickup truck and Puma diesel engine
• Confirmed $400 million investment in Chicago Assembly Plant and the addition of 1,200 jobs to support production of the next-generation Ford Explorer

AUTOMOTIVE SECTOR

For the first quarter of 2010, Ford’s worldwide Automotive sector reported a pre-tax operating profit of $1.2 billion, compared with a loss of $2 billion a year ago. The improvement reflected higher volume and mix, as well as improvements in net pricing across all Automotive segments.    

Total vehicle wholesales in the first quarter were 1.3 million, compared with 986,000 units a year ago.  Worldwide Automotive revenue in the first quarter was $25.4 billion, up from $21 billion a year ago.

North America: For the first quarter, Ford North America reported a pre-tax operating profit of more than $1.2 billion, compared with a loss of $665 million a year ago. The improvement was more than explained by higher volume and mix and favorable net pricing. First quarter revenue was $14.1 billion, up from $10 billion a year ago.   

South America: For the first quarter, Ford South America reported a pre-tax operating profit of $203 million, compared with a profit of $63 million a year ago. The increase was more than explained by favorable exchange and net pricing, offset partially by higher costs.  First quarter revenue was $2 billion, up from $1.4 billion a year ago.  

Europe: For the first quarter, Ford Europe reported a pre-tax operating profit of $107 million, compared with a loss of $585 million a year ago. The improvement was explained primarily by higher volume, lower costs, and higher parts profit.  First quarter revenue was $7.7 billion, up from $5.8 billion a year ago.

Asia Pacific Africa: For the first quarter, Ford Asia Pacific Africa’s pre-tax operating profit was $23 million, compared with a loss of $97 million a year ago. The improvement was more than explained by higher profits of unconsolidated China joint ventures  driven by higher industry volumes , favorable net pricing,  increases in industry volume outside of China and favorable exchange. First quarter revenue was $1.6 billion, up from $1.2 billion a year ago.

Other Automotive: Other Automotive consists primarily of interest and financing-related costs and resulted in a first quarter pre-tax operating loss of $391 million, more than explained by net interest expense of $492 million.