FORD MOTOR COMPANY ENJOYS A $2.7 BILLION PROFIT IN 2009…
Ford is the best example of an "American Automaker" dealing with the global markets, reacting and restructuring to survive and profit during the recession. They have surpassed the other U.S. auto companies with strategic and smart marketing plans by facing the poor economic conditions and targeting the customers who buy their products. It appears Ford executives understand that in order to maintain cash flow and save jobs, the existing inventory must be moved out so the auto and truck plants can continue working to produce new products—products that their customers actually want. Although they did receive a burst from the cash for clunkers program, if they didn’t build a product that consumers wanted, they wouldn’t have fared well at all. Speaking of Cash For Clunkers, Ford "has a better idea"…They are going to cash in on Toyota’s recent news that Toyota is suspending the manufacture and sale of eight of its most popular models because of an unresolved mechanical flaw. On Thursday, Ford pledged to give $1,000 to current Toyota, Lexus, Scion, Honda or Acura drivers who trade in vehicles or have leases expiring by June 30th. The trades must be 1995 vehicles or newer.
Maybe the biggest factor in Ford’s survival is the way their administrators implemented a plan early on and create innovative ways to deal with the recession in the year ahead. Ford took a long-term approach in knowing 2009 would be a difficult year and the economic recovery may not start until the second half of 2009. Perhaps Obama should have consulted with Ford CEO Alan Mulally
and other Ford executives before he treaded into the auto market industry as ill-prepared as he was.
Ford’s full-year revenue of $118.3 billion fell 14 percent from 2008, but the Dearborn-based automaker benefited from $5.1 billion in cuts to manufacturing, engineering and advertising and a $1.3 billion profit at Ford Credit. It gained market share in North and South America and Europe despite the worst U.S. sales climate in 30 years. Share in Asia was flat.
Ford CEO Alan Mulally said 2009 was "pivotal" but Ford has work to do.
"Ford’s transformation remains a work in progress and is far from complete," he said in a conference call with analysts and media. Back in 2006, Ford was considered the weakest of the three domestic automakers.
Ford shares fell 14 cents, or 1 percent, to $11.41 in early afternoon trading after Ford halted production of some full-sized commercial vehicles in China. The vehicles contain gas pedals built by the same company behind the accelerators in Toyota Motor Corp.’s recall. Mulally said Ford is still determining if there is a problem.
Ford’s 2009 net income was 86 cents per share. It lost a record $14.6 billion, or $6.50 per share, in 2008. Excluding special items, Ford’s earnings per share for the year were flat.
Ford made money in three of the four quarters last year. In the fourth quarter, it earned $868 million, or 25 cents per share, compared with a loss of $5.9 billion a year earlier. Quarterly revenue of $35.4 billion was up 22 percent.
For the quarter, Ford made 43 cents before special items. That surprised Wall Street, where analysts expected 26 cents per share.
JPMorgan auto analyst Himanshu Patel retained his neutral rating on Ford, saying fourth-quarter profits were largely driven by Ford Credit and could be unsustainable. He also said tax penalties for Ford’s underfunded pensions are affecting the shares’ value.
Previously, Ford was only willing to say it would be "solidly profitable" in 2011. It now predicts a profit — excluding special items — for 2010 because of signs of economic growth, lower costs and its ability to get higher prices for its vehicles, Chief Financial Officer Lewis Booth said. The 2010 Ford Fusion midsize sedan is selling for $2,000 more than the 2009 model because Ford is doing less discounting and customers are upgrading options.
Still, Booth said the recovery is tenuous. Ford predicts U.S. sales of 11.5 to 12.5 million vehicles in 2010, down from 17 million as recently as 2005. Consumer spending remains weak in the U.S. and Europe, credit is tight and Ford expects payback from last year’s Cash for Clunkers schemes in Europe.
Ford expects to match or beat last year’s U.S. market share of 15.3 percent, which was up 1.1 percentage points. It was Ford’s first U.S. market share increase since 1995.
Mulally said Ford could benefit from safety-related recalls at Toyota. On Thursday, Ford pledged to give $1,000 to current Toyota, Lexus, Scion, Honda or Acura drivers who trade in vehicles or have leases expiring by June 30. The trades must be 1995 vehicles or newer.
"With a void right now and people needing vehicles, there’s going to be even more interest in Ford," he said.
The automaker finished the year with $34.3 billion in debt, up $7.4 billion from Sept. 30. The company took on $7 billion in debt it owes a retiree health care trust fund run by the United Auto Workers union. It puts Ford at a disadvantage to GM and Chrysler Group, which were able to shed debt in bankruptcy court.
Booth said the company has "an uncompetitive balance sheet" and will work on cutting debt this year, but he wouldn’t say what steps it will take.