Ford Motor Company, the only one of the three Detroit automakers to avoid filing for bankruptcy protection this year, has surprised analysts and just about everyone else by reporting a profit of $997 million in the fiscal quarter that ended in September.
In further good news, the company reported the first quarterly profit on its North American operations in more than four years - $357 million.
Ford's third-quarter profit works out to 29 cents per share, compared with a $129 million, or six-cent-per-share, loss in the same quarter one year ago. Excluding special items, the company posted an after-tax operating profit of $879 million, or 26 cents per share, on revenue of $30.1 billion, down from $32.1 billion one year ago. Analysts had expected a 12-cent-per-share loss on revenue of $28.3 billion. Since deciding that it did not need a government bailout, Ford has consistently turned in better-than-expected results from its operations.
The surprisingly positive report indicates that the company's cost-cutting efforts have borne fruit. Earlier in the year, Ford won cost-cutting concessions from the United Auto Workers that save it $500 million a year. Ford reported that it is on track to exceed its cost-cutting goals for the year by $1 billion with a total of $5 billion in savings.
Ford has also benefited from positive press about the quality of its vehicles, the most recent coming from the respected consumer magazine Consumer Reports. Results of the magazine's annual members' survey indicated that Ford's overall vehicle reliability was on a par with the best automakers worldwide.
The strong quarterly results bring Ford's year-to-date profit to $1.8 billion, or 61 cents per share. The company lost $8.8 billion in the first nine months of 2008 and $14.6 billion for the year, the worst loss in its history. The company has set a goal of breaking even or returning to full profitability in 2011; with these results, it said in its quarterly earnings report, it is "on track to be solidly profitable in 2011 with positive operating-related cash flow."
While the company borrowed heavily in 2009, its $25 billion in long-term debt is largely offset by strong cash reserves of $23.8 billion.
Written by Sandy Smith
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