FORD surprised Wall Street with a third-quarter profit yesterday and raised its 2011 outlook to “solidly profitable”.
Ford, the only large US automaker to avoid bankruptcy in 2009, said the third-quarter results were supported by cost-cuts, improved credit results and increased market share in North America and other key areas.
Ford burned through $4.7bn (£2.9bn) of cash in the first half of 2009 but reported $1.3bn of positive cash flow in the third quarter — its first positive cash flow since the second quarter of 2007. It said it expects positive cash flow in the fourth quarter as well.
“That’s a huge deal,” chief financial officer Lewis Booth said of the positive cash flow. Booth was speaking to reporters after the release of the results. The company also reported its first quarterly operating profit in its key home market of North America since the first quarter of 2005. “Our third-quarter results clearly show that Ford is making tremendous progress despite the prolonged slump in the global economy,” said chief executive Alan Mulally.
Ford, which raised its 2011 outlook from a previous forecast for at least break-even, said it was confident the global economy would be improving by 2011. But it said the near-term growth outlook “remains rather uncertain”.
Some analysts believe Ford will be profitable next year. Ford reported a net profit of $997m for the third quarter, compared with a net loss of $161m a year earlier. Operating profit was 26 cents per share excluding one-time items. On that basis, analysts on average expected a loss of 12 cents per share. Revenue fell by $800m to $30.9bn.