CAR giant Ford yesterday posted a higher-than-expected quarterly profit and pulled forward by a year a debt-reduction forecast seen as key to returning the automaker to an investment-grade credit rating.
Ford, which expects to be solidly profitable this year, said it repaid $2bn (£1.26bn) of debt in the third quarter, expects to pay down a debt to a union retiree healthcare trust fund on Friday, and has launched a convertible note offering to reduce its debt.
The automaker said it now expects cash on hand in its automotive business to at least match its debt by the end of 2010 – a year ahead of a forecast it gave in July.
Ford chief Alan Mulally said that new cars and aggressive cost-cutting had helped to boost profits. Ford, which posted losses totalling $30bn from 2006 through 2008, borrowed $23.5bn in late 2006 to support its turnaround, leaving it with much heavier debt loads than rivals General Motors and Chrysler.
Dearborn, Michigan-based Ford last had an investment-grade credit rating in May 2005. It has not been cash flow positive in its automotive business since the second quarter of 2008.
Third-quarter net profit rose to $1.7bn, or 43 cents per share, from $997m, or 29 cents per share, a year earlier. Excluding the Volvo unit it sold in August, revenue rose $1.7bn to $29bn. Ford reported earnings of 48 cents per share excluding one-time items. Analysts on average expected 38 cents a share.
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After its fifth consecutive quaterly profit, Ford now aims to achieve zero net debt by December.
Third quarter net profit rose to $1.7bn from $997m a year earlier – a rise of 68 per cent.
City A.M. Reporter