The Ford Motor Company posted better-than-expected results on Thursday, mostly because of one-time gains tied to debt restructuring.þþFord, the only domestic automaker not to go through bankruptcy protection, reported a surprising second-quarter profit of $2.3 billion, though its automotive operations lost money.þþThe company said the profit, equal to 69 cents a share, was largely the result of a $3.4 billion gain from debt restructuring. Excluding that figure and other special items, Ford would have lost $638 million, or 21 cents a share, still a significant improvement from the $1.4 billion that it lost on continuing operations a year ago and less than half the loss analysts were expecting.þþThe overall profit is a positive swing of $11 billion from a year ago, when it lost $8.7 billon, its worst quarterly result in company history.þþ“While the business environment remained extremely challenging around the world, we made significant progress on our transformation plan,” Ford’s chief executive, Alan R. Mulally, said in a statement. “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.”þþFord said it remained on track to break even by 2011 and asserted that it “has sufficient liquidity to fund its product-led transformation plan and provide a cushion against the uncertain global economic environment.”þþIt had $21 billion in cash reserves at the end of the quarter, after burning through $1 billion since April. A year ago, Ford was spending its cash nearly three times as quickly.þþDespite the positive performance, analysts say Ford still has much work ahead of it to overcome the auto industry’s worst slump in decades.þþ“We think the longer-term outlook has some meaningful challenges that suggest the ultimate upside is limited,” Chris Ceraso, an analyst with Credit Suisse, wrote in a recent note to clients. “Specifically, we believe that Ford is still carrying too much leverage and will have to reduce debt, perhaps through additional equity issuance.”þþFord has been working hard to paint itself as different from its cross-town rivals, General Motors and Chrysler, with relative success. Some consumers who opposed the billions of dollars in emergency loans given to G.M. and Chrysler or feared buying from a bankrupt automaker have been drawn to Ford instead.þþAdditionally, new products like the Taurus sedan and Fusion gas-electric hybrid sedan have been receiving glowing reviews and selling well.þþFord’s market share in the first half of 2009 rose to 16.1 percent, up from 15.5 percent a year ago, and those gains have come even with less discounting on its cars and trucks. It outsold Toyota in the first half of the year after allowing the Japanese company to take over second place in the United States market for the last two years.þþIn June, Ford’s sales fell 11 percent, compared to 33 percent at G.M. and 42 percent at Chrysler. As a result, Ford is increasing production in the third quarter by 16 percent.þþIts stock price has more than quadrupled since hitting a low point of $1.50 in mid-February.þþA report from the banking firm Merrill Lynch last week projected that Ford’s market share would increase about 3 percent in the next four years, surpassing G.M. The report also estimated that Ford would earn a small profit in 2010 and as much as $1 per share the following year.þþIn June, Ford was one of three automakers, along with Nissan and the electric-car startup Tesla, to get loans from an Energy Department fund aimed at accelerating production of more fuel-efficient vehicles. Ford is borrowing $5.9 billion to help it retool 11 factories in the Midwest.þþ
Source: NY Times
