Ford Motor Co. managed to swing to a profit after a spate of heavy losses with the aid of cost-cutting and a one-time gain from debt reduction in the first quarter, the automaker said Thursday.
Ford, the only member of the Detroit Three automakers to have avoided bankruptcy, said it remains “on track” to return to profitability by 2011.
“While the business environment remained extremely challenging around the world, we made significant progress on our transformation plan,” said Ford president and chief executive Alan Mulally.
“Our underlying business is growing progressively stronger as we introduce great new products that customers want and value, while continuing to aggressively restructure our business and strengthen our balance sheet.”
Ford posted a second-quarter net profit of 2.3 billion dollars thanks to a 3.4 billion dollar gain from debt restructuring.
That compared with a whopping 8.7 billion dollar loss in the same period a year ago.
The automaker said it managed to narrow its after-tax operating loss to 638 million from 1.4 billion dollars in the second quarter of 2008.
The operating results, an important indicator of the health of the struggling auto giant, were better than expected, translating to a loss of 21 cents a share, contrasted with Wall Street forecasts of 48 cents.
“Overall, given the current automotive industry environment, we consider the quarterly performance strong,” said Efraim Levy, and analyst with Standard & Poor’s Equity Research.
“With Ford refreshing its product lines faster than many peers, it should continue to gain market share across regions.”
Ford’s second-quarter revenue was a better-than-expected 27.2 billion dollars, down 11 billion from the same period a year ago amid a sharp reduction in overall auto sales.
However the automaker said it had managed to increase its market share in all regions, including a two point gain to 16.4 percent of the key US market, and expects those gains to continue amid a “strong reception” to the new products it will introduce in the second half of the year.
Ford said it expects 2009 US industry sales will be between 10.5 million and 11 million units, down sharply from last year but reflecting an improvement from a dreadful start to the year.
“Clearly the road ahead remains challenging,” Mulally said in a conference call.
“While we still expect the economy to begin to improve in the second half of the year, the recovery is likely to be more modest than many of us had hoped,” he cautioned.
“I remain convinced and am more confident than ever that we have the right plan and the right actions to transform form into a lean company delivering profitable growth.”
While Ford was able to survive the current collapse in auto sales without a government bailout, it has nonetheless been struggling for years to overcome a steady loss of market share in its home market.
Ford has posted three straight years of annual losses which totalled 30 billion dollars and lost a further 1.4 billion in the first quarter of this year.
The iconic US automaker has shed tens of thousands of jobs and closed plants in an effort to cut costs, and sold off the bulk of its luxury European brands, including Jaguar and Aston Martin.
It is working to find a buyer for its Swedish Volvo brand — which lost 231 million dollars in the quarter — and hopes to cut automotive structural costs by four billion dollars in 2009.
The number two US automaker ended the quarter with 21 billion dollars in cash for its auto division, as it reduced its so-called cash burn to one billion dollars from 2.7 billion dollars a year ago.
Ford shares closed up 9.4 percent at 6.98 dollars.
