• Jan 28, 2011
Ford announced this morning that the company earned net income of $190 million in the fourth quarter of last year, which is actually down sharply from the $886 million earned in the same quarter a year ago. The reason for the dip, however, is a good one, as Ford took on $960 million in debt reduction charges during the quarter, which ultimately reduced the company's debt by $1.9 billion.

It's a different story for last year as a whole, as Ford is reporting a $6.6 billion, that's with a 'b', profit for all of 2010 – Ford's best fiscal performance in over a decade. This means the Blue Oval has $20.5 billion in gross cash on hand, while it's debt has been reduced to $19.1 billion. Over the course of last year, Ford reduced its debt by a total of $14.5 billion or 43 percent, all of which was taken on before the financial crisis and used to weather the storm of uncertainty.

Ford's full-time work force will also be happy to hear that the company's financial performance last year means healthy profit sharing in the form of approximately $5,000 for each employee. Ford also announced that it's raising its first-quarter production plan in North America by 15,000 units to 650,000, which means even more job security for those on the assembly room floor.

[Source: Ford, Automotive News - sub. req.]
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FORD REPORTS 2010 FULL YEAR NET INCOME OF $6.6 BILLION; FOURTH QUARTER NET INCOME OF $190 MILLION+

* Full year net income was $6.6 billion, or $1.66 per share, a $3.8 billion increase from a year ago. Pre-tax operating profit was $8.3 billion, an increase of $8.3 billion from a year ago.
* Fourth quarter net income was $190 million, or 5 cents per share, a decrease of $696 million from a year ago. Net income was negatively impacted by a previously disclosed $960 million charge for completion of debt conversion offers in the quarter that reduced outstanding Automotive debt by over $1.9 billion.
* Fourth quarter pre-tax operating profit was $1.3 billion, or 30 cents per share, a decrease of $322 million from a year ago. Ford now has posted a pre-tax operating profit for six consecutive quarters.
* Automotive pre-tax operating profit was $741 million for the fourth quarter and $5.3 billion for the full year, an improvement of $7.2 billion from full year 2009.
* Ford Credit reported a pre-tax operating profit of $572 million for the fourth quarter and $3.1 billion for the full year, an increase of $1.1 billion from full year 2009.
* Revenue was $32.5 billion in the fourth quarter and $120.9 billion for the full year, an increase of $17 billion from full year 2009, excluding Volvo from 2009.
* Ford continued to reduce Automotive debt with an additional $7.3 billion of actions taken in the fourth quarter, including $2.5 billion of newly announced reductions. For the full year, Ford reduced Automotive debt by $14.5 billion, or 43 percent, which will lower annualized interest expense by more than $1 billion.
* Ford ended 2010 with Automotive gross cash exceeding debt by $1.4 billion, an improvement of $10.1 billion from year end 2009. Ford ended 2010 with $20.5 billion of Automotive gross cash.
* Ford generated positive Automotive operating-related cash flow of $1 billion in the fourth quarter and $4.4 billion in 2010, an improvement of $5.2 billion from full year 2009.
* Ford plans to deliver continued improvement in pre-tax operating profit and Automotive operating-related cash flow in 2011.


DEARBORN, Mich., Jan. 28, 2011 – Ford Motor Company [NYSE: F] today reported 2010 full year net income of $6.6 billion, or $1.66 per share, an increase of $3.8 billion, or 80 cents per share, from 2009. This was Ford's highest net income in more than 10 years, as strong products and new investments fueled improvements in all of the company's business operations around the world.

"Our 2010 results exceeded our expectations, accelerating our transition from fixing the business fundamentals to delivering profitable growth for all," said Alan Mulally, Ford president and CEO. "We are investing in an unprecedented amount of products, technology and growth in all regions of the world."

Full year 2010 pre-tax operating profit was $8.3 billion, or $1.91 per share, an increase of $8.3 billion, or $1.90 per share, from a year ago. This increase reflects a profit in each Automotive segment led by strong performance in North America, reflecting primarily favorable volume and mix as well as favorable net pricing. Ford Credit's strong profit also contributed significantly to Ford's full year performance.

Ford made significant progress in strengthening its balance sheet, reducing Automotive debt by $14.5 billion in 2010, a 43 percent reduction. These actions will lower annualized interest expense by more than $1 billion. Ford finished the year with Automotive gross cash exceeding debt by $1.4 billion. Fourth quarter actions reduced Automotive debt by $7.3 billion, including $2.5 billion of newly announced debt reductions to pay down Ford's revolving credit facility and term loans.

Ford reported fourth quarter net income of $190 million, or 5 cents per share, a decrease of $696 million, or 20 cents per share, from the fourth quarter of 2009. This includes the negative impact of special items of $1 billion, primarily associated with a previously disclosed $960 million charge related to the completion of debt conversion offers that reduced outstanding Automotive debt by over $1.9 billion.

Ford earned a pre-tax operating profit of $1.3 billion, or 30 cents per share, in the fourth quarter, marking the sixth consecutive quarter of pre-tax operating profit. This is a decrease of $322 million, or 13 cents per share, from the fourth quarter of 2009.

Fourth quarter Automotive pre-tax operating profit was $741 million, a decrease of $173 million from a year ago. Fourth quarter Financial Services pre-tax operating profit was $552 million, a decrease of $149 million from a year ago, which includes a pre-tax operating profit of $572 million for Ford Credit.

North America posted a fourth quarter pre-tax operating profit of $670 million, a $59 million increase compared with 2009. Full year North America pre-tax operating profit was $5.4 billion, an improvement of more than $6 billion from a year ago. South America, Europe and Asia Pacific Africa also reported full year pre-tax operating profits for 2010.

As a result of Ford's 2010 financial performance, the company will pay profit sharing to approximately 40,600 eligible U.S. hourly employees. The average amount is expected to be approximately $5,000 per eligible full-time employee.

Ford's fourth quarter worldwide revenue was $32.5 billion, an increase of $1.6 billion compared with the same period a year ago, excluding Volvo from 2009. Ford reported full year revenue of $120.9 billion, an increase of $17 billion from a year ago, excluding Volvo from 2009.

Ford generated positive Automotive operating-related cash flow of $1 billion in the fourth quarter and $4.4 billion in the full year, an improvement of $5.2 billion from full year 2009.

Ford finished the year with Automotive gross cash of $20.5 billion and total Automotive debt of $19.1 billion. Automotive gross cash was down $3.3 billion from the end of the third quarter as a result of significant debt reduction actions. As of Dec. 31, 2010, total Automotive liquidity was $27.9 billion, including available credit lines.

"The progress that we made improving our core Automotive business has allowed us to strengthen significantly the balance sheet in 2010, and this will remain a key area of focus for us in 2011," said Lewis Booth, Ford executive vice president and chief financial officer. "We continue to manage the business for long term profitable growth."

FOURTH QUARTER AND FULL YEAR 2010 HIGHLIGHTS

* Announced $850 million in future investments for Michigan-based engineering and manufacturing, leading to 1,200 jobs through 2013
* Announced $600 million investment in Louisville Assembly and additional 1,800 jobs
* Announced $630 million investment in Kocaeli, Turkey, for future Transit production
* Launched 2011 F-150 lineup with completely new fuel-efficient engines
* Unveiled all-new global Ford Ranger at the Australian International Motor Show
* 2011 Explorer awarded North American Truck of the Year at the North American International Auto Show
* New Figo won Society of India Auto Manufacturers' 2011 Indian Car of the Year
* The redesigned Explorer and new Fiesta earned IIHS Top Safety Picks in the U.S.; C-MAX and Grand C-MAX earned Euro NCAP five-star safety ratings
* Increased U.S. sales 15 percent in the fourth quarter. For the full year, Ford had the first back-to-back market share increase since 1993, and the largest sales percentage increase of any full-line automaker
* Ford of Canada reported an 11 percent sales increase in the fourth quarter, leading Ford of Canada to finish 2010 as best-selling automaker for the first time in more than 50 years
* Ford Brazil sales increased 24 percent in the fourth quarter, leading to a market share gain of three-tenths of a point
* European market share fell in the fourth quarter and full year as a result of Ford's decision to reduce participation selectively in low-margin business, as well as the end of the favorable effect of scrappage programs on its small car sales
* Sales increased 35 percent in Asia Pacific and Africa in the fourth quarter. In 2010, the region reported record full year sales in China and India, with 32 and 168 percent increases respectively

AUTOMOTIVE SECTOR

Total Automotive pre-tax operating profit in the fourth quarter was $741 million, a decrease of $173 million from a year ago. The decrease is more than explained by higher structural and commodity costs, aligned with guidance, as well as unfavorable volume and mix. This was offset partially by favorable net pricing. The higher structural costs, which include manufacturing, engineering, and advertising costs, largely supported product launches and growth of product plans.

Full year pre-tax operating profit was $5.3 billion, an improvement of $7.2 billion compared with a year ago, led by strong performance in North America. Each of the Automotive segments was profitable and also improved compared with a year ago.

Total vehicle wholesales in the fourth quarter were 1.4 million units, up 41,000 units from a year ago, excluding Volvo from 2009. The increase was explained primarily by higher wholesales in Asia Pacific Africa, offset partially by lower wholesales in Europe. Full year total vehicle wholesales were 5.3 million units, up 771,000 units, excluding Volvo from 2009.

Total Automotive revenue in the fourth quarter was $30.3 billion, up $2.2 billion from a year ago, excluding Volvo from 2009. Full year total Automotive revenue was $111.2 billion, up $19.7 billion from a year ago, excluding Volvo from 2009.

North America: In the fourth quarter, North America reported a pre-tax operating profit of $670 million, compared with a profit of $611 million a year ago. The increase reflects favorable net pricing, higher industry volume, favorable mix, market share improvements, and favorable exchange. These were offset partially by the non-recurrence of prior-year stock increases, higher structural costs to support product launches and growth, higher commodity costs and costs associated with the recently announced Windstar field service actions. Fourth quarter revenue was $17.2 billion, up from $15.6 billion a year ago.

For the full year, North America reported a pre-tax operating profit of $5.4 billion, compared with a loss of $639 million a year ago. The improvement primarily reflects favorable volume and mix, net pricing, and exchange, offset partially by higher structural costs to support higher volume and product launches.

South America: In the fourth quarter, South America reported a pre-tax operating profit of $281 million, compared with a profit of $369 million a year ago. The decrease was more than explained by higher commodity and structural costs, offset partially by favorable net pricing. Fourth quarter revenue was $2.8 billion, up from $2.6 billion a year ago.

For the full year, South America reported a pre-tax operating profit of $1 billion, compared with a profit of $765 million a year ago. The increase was more than explained by favorable net pricing, exchange, and mix, offset partially by higher commodity and structural costs.

Europe: In the fourth quarter, Europe reported a pre-tax operating loss of $51 million, compared with a profit of $253 million a year ago. The decline was more than explained by lower market share, higher structural costs to support product launches, higher commodity costs, and lower industry volume, offset partially by favorable exchange and mix. The lower market share primarily reflects Ford's decision to reduce participation selectively in low-margin business, as well as the end of the favorable effect of scrappage programs on its small car sales. Fourth quarter revenue was $8.1 billion, down from $8.2 billion a year ago.

Compared to Ford's most recent guidance for Europe, the fourth quarter result was lower than expected, reflecting primarily lower market share driven by actions to maintain margins.
For the full year, Ford Europe reported a pre-tax operating profit of $182 million, compared with a loss of $144 million a year ago. The improvement primarily reflects the non-recurrence of prior-year stock reductions, lower material and warranty costs, higher parts and services profits, and favorable mix. This was offset partially by lower market share and higher structural costs.

Asia Pacific Africa: In the fourth quarter, Asia Pacific Africa reported a pre-tax operating profit of
$23 million, compared with a profit of $16 million a year ago. The increase is more than explained by higher volume, offset partially by unfavorable mix. Fourth quarter revenue, which excludes sales at unconsolidated China joint ventures, was $2.2 billion, up from $1.7 billion a year ago.

For the full year, Asia Pacific Africa reported a pre-tax operating profit of $189 million, compared with a loss of $86 million a year ago. The improvement primarily reflects higher volume, and lower material, freight and warranty costs, offset partially by higher structural costs to support investment in Ford's product and growth plans, and unfavorable mix.

Other Automotive: The fourth quarter Other Automotive loss was $182 million, compared with a loss of $295 million a year ago. This improvement primarily reflects favorable fair market value adjustments related primarily to our investment in Mazda and lower net interest expense.

For the fourth quarter, the Financial Services sector reported a pre-tax operating profit of $552 million, a decline of $149 million compared with a year ago.

Ford Motor Credit Company: In the fourth quarter, Ford Credit reported a pre-tax operating profit of $572 million, compared with a profit of $714 million a year ago. The decrease reflects lower volume and the non-recurrence of lower lease depreciation expense related to lower gains as fewer leases terminated and the vehicles were sold.

For the full year, Ford Credit reported a pre-tax operating profit of $3.1 billion, compared with a profit of $2 billion a year ago. The increase reflects primarily a lower provision for credit losses and lower depreciation expense for leased vehicles related to higher auction values. These were offset partially by lower volume and the non-recurrence of net gains related to unhedged currency exposure from intercompany lending.

OUTLOOK 2011
Ford remains focused on delivering the key aspects of the One Ford plan, which are unchanged:

* Aggressively restructuring to operate profitably at the current demand and changing model mix
* Accelerating the development of new products that customers want and value
* Financing the plan and improving the balance sheet
* Working together effectively as one team, leveraging Ford's global assets

Overall, 2010 marked a pivotal year as Ford launched 24 new or redesigned vehicles in key markets around the world, including the redesigned Explorer, the new Fiesta, as well as the redesigned Edge and Lincoln MKX in North America, the redesigned C-MAX and new Grand C-MAX in Europe, and the new Figo in India. The company also announced more than $9 billion in global investments for future growth, including: $4.5 billion in North and South America; $2.9 billion in Europe; and $1.7 billion in Asia Pacific Africa.

The One Ford transformation continues in 2011 as Ford launches the new global Focus in North America, Europe and Asia Pacific Africa, as well as the Focus Electric in North America later in the year. The new global Ranger will hit markets in Asia Pacific Africa and Europe this year, and the company will continue to expand the EcoBoost family of engines by offering it in additional markets and vehicles.

Ford plans to build on its performance in 2010 with continued improvement in 2011 total company pre-tax operating profit and Automotive operating-related cash flow. On a full year basis, Ford expects each of its Automotive operations to be profitable in 2011. In addition, the Automotive operating margin in 2011 is expected to be equal to or improved from 2010.

Ford also expects solid profitability for Ford Credit in 2011, although at a lower level than 2010, reflecting primarily the non-recurrence of lease depreciation expenses and credit loss reserve reductions of the same magnitude as 2010. At year-end 2011, Ford Credit anticipates that managed receivables will be in the range of $80 billion to $85 billion. Ford Credit is projecting distributions of about $2 billion during 2011.

Ford expects U.S. full year industry volume will be in the range of 13 million to 13.5 million units and, for the 19 markets Ford tracks in Europe in the range of 14.5 million to 15.5 million units, including medium and heavy trucks.

The company expects its full year U.S. total market share and its share of the U.S. retail market as well as European market share to be equal to or improved from 2010.

Full year Automotive structural costs are expected to be higher, as the company increases production to meet demand and makes further investments in new products, technology and growth. Commodity costs also are expected to be higher this year, reflecting increased global demand.

Ford expects capital expenditures in the range of $5 billion to $5.5 billion, as the company continues to invest in its product and growth plans.

"We expect continued improvement in 2011, driven primarily by our growing product strength, a gradually strengthening global economy and an unrelenting focus on improving the competitiveness of all of our operations," said Mulally. "We are delivering on our commitments to serve our global customers with a best-in-class full family of Ford products and delivering profitable growth for all associated with Ford."


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  • 31 Comments
      • 3 Years Ago
      News like this makes me with I bought more Ford stock when it was rock bottom.
        • 3 Years Ago
        You may want to try buying today, it's down 11% on this "good" news
        • 3 Years Ago
        Ditto.

        Of course, the good news didn't stop Ford stock from losing 10% today. Hopefully it will rebound soon.
        • 3 Years Ago
        "and when I read why the profit was down because they paid debt down I was much more relaxed . " - RAndroid

        Profit is not the same as cash. Loan repayments themselves do not affect the P&L account, only the balance sheet. Bank charges and legal fees associated with the loan, as well as any early repayment, as well as accrued interest charges, will however affect profitability.
        • 3 Years Ago
        oh don't worry it will come back for sure.when I woke up and saw the drop in price i almost freaked out . and when I read why the profit was down because they paid debt down I was much more relaxed . Phew
        • 3 Years Ago
        I started buying at just over $4. Ford is going to allow me to retire early. =)
      • 3 Years Ago
      The UAW will put an end to that foolishness. We can't have a profitable US automaker gosh darnit.
      • 3 Years Ago
      A well run company with good products equals profits. As it should be.
        • 3 Years Ago
        This is mostly good news for Ford, but the analyst on Wall St just don't understand all the costs involved with the auto industry,esp the Q4 disappointment at Ford:
        - Heavy engineering cost for (4) new engines in the F150 - production delays too!
        - Start-up costs for the new Explorer
        - Higher marketing (incentives) in Q4 to clear-out year-end inventory
        - Global start-up costs for the One Ford new Global Focus
        - ($300M) different in Europe Q4

        Q1'11 is going to be challenging for Ford as well:
        - Lost F150 production due to shutdown - lack of new V6 engines
        - Heavy New Focus start-up costs with very light production to offset these costs
        - No Mercury volume

        I'd consider buying long Ford Call Options ('13 Jan Leap) when Ford (F) bottoms sometime next week... target $15.25 (when it may back-fill a gap in the charts from Nov 3rd), although there is support at $15.75... tbd.

        Note: The stock market has failed to break-thru S&P 1300 and is falling, could be the start of a long over do correction by at least 10%... then buy!
        • 3 Years Ago
        On the customer side it is a bummer about the delay in the EcoBoosts for the Explorer. I don't think it'll affect Ford financially though.

        On the financial side, it is disappointing to see the incentives. Ford is putting cash on the hoods of Fiestas now. That's a bummer for a good very new car. I'm afraid that the excellent new small cars that Ford is making (and others too) are being ignored by customers.
      • 3 Years Ago
      ..so why did they get rid of those awesome European brands?
      • 3 Years Ago
      With all Toyota's cash on hand you'd think they could develop some interesting cars. Gotta wonder what gives?
      • 3 Years Ago
      Very impressive, Ford. Is there ANY doubt in anyone's mind that Alan Mulally is one of the best CEO's around? I mean, I realize he didn't do it all himself, but he's obviously played a huge part in Ford's resurrection. And as far as the products go, they're making some of the best looking cars among ANY car manufacturer, not just American ones.
        • 3 Years Ago
        @Spin Cycle I don't see Boeing's current issues as a black mark for Mulally at all. Mulally's been at Ford since 2005. The delays and problems with the 787 aren't his fault. The causes, global financial meltdown and the fall of the commercial airline business occurred after he left Boeing.
        • 3 Years Ago
        @spin cycle
        "t's not quite a slam dunk argument. The huge mess with the 787 project at Boeing (3 years late at counting) is substantial a black mark on his record."

        All spin, no substance.

        Mulally is credited with getting Boeing back on track after 9/11. Also, 787 project started to fall apart 2 years after Mulally took the CEO position at Ford. In fact, there were some Boeing shareholders in the last year or two that wanted Boeing to try to lure Mulally back to the company.

        • 3 Years Ago
        gasser:
        The 777 was done in-house, it didn't use the outsourcing partnering program of the 787. Also, although Mulally was pivotal on the 777 program, he didn't lead it.

        Also, the 787 didn't spring fully formed in the year after Mulally left. All of the planning and most of the execution took place while Mulally was there.

        The parts that made up the 787 that rolled out on 7/7/2007 (after Mulally) were laid up (produced) before Mulally left! How can you say the problems started after he left?

        http://www.flightglobal.com/articles/2006/07/11/207664/dreamliner-takes-shape.html

        I didn't say the 787 debacle, which is at his feet, means that something went wrong at Ford. In fact I twice said it did not. But he's not one of the best CEOs ever when he screwed up so badly with the 787 plan.
        • 3 Years Ago
        Trying to blame Mulally for what's going on with the 787 program is stupid.

        The partnering philosophy worked fine on the 777 program, which he led successfully.

        The 787 program fell apart due to poor leadership, not poor plan architecture. The morons who couldn't execute blamed "the plan" because blaming their failure to execute would point out their incompetence and laziness. (Do you really expect incompetent boobs to publicly blame themselves? Give me a break.)

        Mulally wasn't around to execute his plan and its disingenuous to blame him for the incompetent execution of other, less capable executives. Those dopes would have failed massively under any plan, new or old. And guess what? Even if you could conclusively demonstrate that the 787 mess was somehow all on Mulally, nothing changes the fact that he has made thousands of good decisions at Ford that have put Ford in a better position for success than Ford has seen for 30 years.
        • 3 Years Ago
        It's not quite a slam dunk argument. The huge mess with the 787 project at Boeing (3 years late at counting) is substantial a black mark on his record.

        Ford shareholders have little to complain about though.
        • 3 Years Ago
        I had a much better reply here, but the commenting system found fault with it. So I'll write a less elegant, shorter one.

        The problems with the 787 started under Mulally, they just didn't become apparent until later because no one knew had hard evidence until the plane rolled out that the project was behind.

        The problems are due to the outsourcing plan that Mulally came up with.

        source:
        http://seattletimes.nwsource.com/html/businesstechnology/2003245507_boeingheads06.html

        A 2006 article explaining how great Mulally's plans for the 787 were, before they backfired.

        'Mulally's contributions were particularly impressive considering the [situation] he faced, said Richard Aboulafia, an analyst with Teal Group. ...
        Mulally sold the concept of recruiting as many partners as possible to share the work of building the 787. ... In outsourcing work, he removed risk from the company's books and helped make it a no-brainer," Aboulafia said.'

        But the outsourcing didn't remove risk, it just made it look like it did. Boeing ended up having to pay customers money to compensate for late deliveries. Boeing had to do much rework in-house to make up for quality problems with suppliers' parts. Boeing had to fund and even buy out suppliers when delays caused financial difficulties for them. So Boeing had to foot the bill, the risk was on the books and it bit them.

        Still, he has not made the same mistakes at Ford, so as I mentioned Ford shareholders (including myself) have little to complain about.
      • 3 Years Ago
      Kudos Ford.
      • 3 Years Ago
      And their stock is down 15% today - even though their gross earnings were HIGHER than expectations. Mark Cuban is right, the stock market is for suckers.
        • 3 Years Ago
        Remember the two human emotions involved in the stock market. Greed and fear. You are trying to inject too much logic here.
        • 3 Years Ago
        buy on rumors, sell on news
      • 3 Years Ago
      This is how Ford should have been run in the first place. As an American, I'm proud of what they have done! Bravo!
      • 3 Years Ago
      Probably not much, they've been saving some cash from their design department for the last 20 years or so..
      • 3 Years Ago
      I wish I was working at Ford right now....

      Hopefully Lincoln gets a Mustang base sedan to go against the CTS-V. :)
      • 3 Years Ago
      Paying down debt, great new cars for sale now, and more coming. What's not to like about Ford right now? Let's hope they can keep it going for a few more years at least, to pay off the remaining debt.

      Now let's get to work on Lincoln. Can't let those guys over at Cadillac have all the fun.
        • 3 Years Ago
        @John P

        What's not to like about Ford? Maybe if you really, really don't like horses?

        I've got nothing.
        • 3 Years Ago
        Kudos! More cash on hand then debt. Way to FORD.

        Keep up the good work!
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