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TwitterIn the wake of the Toyota fiasco, Ford Motors Co (F) is certainly making hay while the sun shines. The American automaker today announced annual earnings of $2.7 billion (86 cents per share), its first profit in the last four years. The quarterly net income soared at $868 million, or 25 cents per share. The company managed to finish way ahead of analyst expectations which predicted it to be in the red. Last year it had recorded dramatic losses to the tune of $14.6 billion.
This is attributed mainly to the aggressive cost cutting and an increased market share. Ford reduced its structural costs by $5.1 billion, far outdoing its goal of $1.1 billion. It also managed to gain market share in North America, South America, and Europe. It may be reiterated that Ford is the only major U.S. automaker, not to reorganize under a US government-funded bankruptcy despite having debt twice in value to that of General Motors.
What’s more, it is expected that after the Toyota recall, consumer interest in Ford will rise, since it produces several vehicles comparable to the recalled and suspended cars.
“I’m sure there will be even more interest in Ford,” said Chief Executive Officer Alan Mulally. “It’s really an opportunity for our products to be viewed again. Clearly, everybody realizes now that we’re competing with the best in the world, including Toyota, so we anticipate that going forward in 2010, we see more and more interest in Ford.” Perhaps echoing that sentiment, its shares rose 5 cents to $11.60 earlier in the day.
Ford CEO Allan Mullaly
These positive results, also sparked a performance based profit sharing payment to 43000 employees as a part of the 2007 UAW-Ford Collective Bargaining Agreement. The average amount is expected to be about $450 per eligible employee.
The CEO said that 2009 was a pivotal year for Ford, though he still understands that they will face serious market challenges ahead.
Ford executives also said that they were concerned about the auto company’s high level of debt. “We are fully aware that we have too much debt on our balance sheet. . . . We will continue to work on it,” said Chief Financial Officer Lewis Booth.
In another development, Ford also conceded to suspending the production of a commercial van in China, while it investigates the accelerator pedals, which were supplied by CTS Corp, the supplier involved in Toyota Motor Corp.’s vehicle recall. CTS built pedal assemblies for 1663 Transit Classic Vans made by the venture with Jiangling Motors Corp. in Nanchang, China. The venture used the CTS component in December only and this was sold only in China. According to officials, so far no report of any problem with Transit has been reported. Executives say that it is an isolated event though they intend to take it to ground aggressively. It is estimated that this does not involve more than 2000 vehicles.
In an attempt to lure Toyota owners, Ford also plans to offer $1,000 rebates to Toyota and Honda Motor Co. customers, Robert Parker, a Ford spokesman, said. Like the officials said, there is a lot of work to do to improve the business.
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[...] the ocean, and these troubles are not just restricted to the financial side of the game. With Ford declaring whopping profits of $2.7 billion for 2009, it will feel like someone is rubbing salt of the Japanese car [...]
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