(By
Don Miller )Ford Motor Co. (NYSE:
F), the only major U.S. automaker to avoid bankruptcy in 2009, said yesterday (Monday) that an aggressive cost-cutting campaign, improved earnings at its financing arm and market-share gains in North America resulted in a $997 million third-quarter profit – its first operating profit since early 2008.
Ford has now been profitable for two consecutive quarters, a first for Chief Executive Officer Alan Mulally, who kept Ford out of bankruptcy as General Motors Co. (OTC: MTLQQ) and Chrysler Group LLC reorganized under
Chapter 11 protection earlier this year.
Ford handily beat the 20 cents a share loss projected by 11 analysts surveyed by Bloomberg News, reporting a quarterly pretax profit of $1.1 billion, or 26 cents a share on an adjusted basis, compared with a year-earlier loss of $3 billion, or $1.32 a share.
The back-to-back quarterly profit is the first real evidence that Ford may have completed a turnaround and will meet its goal of turning a full-year profit in 2011.
"Ford is a company that's well into a turnaround," Bernie McGinn, president of McGinn Investment Management of Alexandria, Virginia, told Bloomberg. "They did it by themselves and didn't take government money. That gives people a good gut feeling and they're being rewarded for that."
Ford lopped off $4.6 billion in costs in the first three quarters and expects to eliminate a total of $5 billion in costs this year.
The company also reported positive automotive cash flow of $1.3 billion after it burned through $1 billion in cash in the second quarter. By comparison, Ford burned $7.7 billion in cash in last year's third quarter.
Fitch Ratings raised its outlook on Ford and its finance arm to positive from stable, citing progress on its cost-cutting program, a reduction in output to match demand and a decrease in buyer incentives.
Ford's share of its primary U.S. market increased to 15.8% for the first nine months, compared with 14.8% from a year earlier, according to Autodata Corp.
"We now expect to return to a strong profit in 2011 and positive cash flow," Chief Financial Officer Lewis Booth told reporters. "There are still some headwinds, particularly economic headwinds.
