By Keith Naughton Jan. 28 (Bloomberg) — Ford Motor Co. posted 2009 net income of $2.7 billion, ending three straight annual losses, and forecast a 2010 pretax operating profit as Chief Executive Officer Alan Mulally reaped the benefits of his recovery plan. Fourth-quarter earnings were $868 million, or 25 cents a share, compared with a year-earlier net loss of $5.98 billion, or $2.51, Ford said today. Excluding one-time costs, profit was 43 cents a share, beating analysts’ estimates , and the shares rose. The full-year profit was Mulally’s first since coming from Boeing Co. in 2006. Dearborn, Michigan-based Ford gained U.S. market share for the first year since 1995 with new models such as the revamped Taurus sedan while the predecessors of General Motors Co. and Chrysler Group LLC reorganized with federal aid. “Ford is well along the road in their turnaround,” said John Wolkonowicz , an analyst at IHS Global Insight in Lexington, Massachusetts. “They did it without government help and by themselves. That’s giving them the highest consideration and public acceptance they’ve had in decades.” Ford gained 16 cents, or 1.4 percent, to $11.71 at 9:51 a.m. in New York Stock Exchange composite trading. Analysts’ Estimates Analysts expected an adjusted fourth-quarter profit of 26 cents a share, based on the average of 12 estimates compiled by Bloomberg. For 2010 operating profit, analysts had expected $3.57 billion, the average of five estimates. Ford hadn’t provided a 2010 outlook before today, and didn’t give a number. “This is a real step forward,” Chief Financial Officer Lewis Booth said of the 2010 projection, reiterating Mulally’s timetable to have Ford “solidly profitable in 2011.” Mulally, 64, has focused on refreshing Ford’s lineup, including adding small cars, while working to slash costs. He pared the North American workforce by about 47 percent, sold the Jaguar, Land Rover and Aston Martin luxury brands, and is near a sale of the Volvo unit to Zhejiang Geely Holding Group Co. The Volvo deal may close next quarter, Ford said today. Ford and Hangzhou, China-based Geely aim to reach an agreement before the Feb. 14 Lunar New Year, according to three people familiar with the negotiations. Ford’s 2009 profit followed a record net loss of $14.7 billion a year earlier. Full-year 2009 operating profit was $454 million, compared with an average estimate of a loss of $1.02 billion from five analysts. Automotive debt, which excludes Ford Motor Credit , was $34.3 billion at year’s end, an increase from $26.9 billion on Sept. 30, the company said. Booth said Ford will take steps such as last year’s debt restructuring to reduce its obligations, without elaborating. ‘Not Kidding’ “We’re not kidding ourselves,” Booth told reporters in Dearborn. “We know we have a huge amount of debt and an uncompetitive balance sheet.” Ford reported $25.5 billion in automotive cash at the end of the quarter, up from $23.8 billion at the end of September. Booth said Ford had positive automotive cash flow of $3.1 billion in the quarter, after using $7.2 billion a year earlier. Fourth-quarter sales rose 22 percent to $35.4 billion as Ford boosted North American production 33 percent. The average of 10 analysts’ estimates was for revenue of $31.1 billion. Annual revenue fell 20 percent to $118.3 billion, Ford said. That topped the average estimate of $109.9 billion from 12 analysts. Ford managed to avoid the bankruptcies that befell its U.S. rivals by borrowing $23 billion in late 2006 before credit markets froze. The automaker put up all major assets, including the Ford name, as collateral to build a cash cushion to withstand losses while developing new models. ‘Making Progress’ “The turnaround is still not a slam dunk because of challenges from competitors and the economy,” said Efraim Levy , a New York-based equity analyst for Standard & Poor’s. “But clearly they are making progress.” A recovery in auto demand may help the company in 2010, with Ford saying today that industrywide U.S. light-vehicle sales may rise to a range of 11.3 million to 12.3 million from last year’s 10.4 million. Counting medium- and heavy-duty trucks, the 2010 tally may be as much as 12.5 million. Ford boosted first-quarter North American production to 570,000, an increase of 20,000 vehicles from a plan announced in December. Ford also said it will pay profit sharing of about $450 to each of its 43,000 U.S. hourly workers represented by the United Auto Workers union. Ford said it won’t award performance bonuses to salaried employees for 2009, though it is reinstating merit- pay increases in 2010 for white-collar workers. The UAW is protesting the raises for salaried employees and has accused the automaker of violating a pledge to provide an equality of sacrifice among all workers. Bonds Rise Ford’s 7.45 percent notes due July 2031 rose 0.75 cent to 88.5 cents on the dollar at 8:50 a.m. in New York, according to Trace, the bond-price reporting service of the Financial Industry Regulatory Authority. The yield fell to 8.64 percent. Of 17 analysts rating Ford shares, 9 say buy, 6 advise holding and 2 recommend selling, according to data compiled by Bloomberg. In January 2009, 1 analyst had a buy rating while 8 said hold and 3 said sell. “People are now saying, ‘Holy smokes, these guys have the financial resources, the product line and they’ve become very popular,’” said Bernie McGinn , president of McGinn Investment Management of Alexandria, Virginia, which owns 320,000 Ford shares. “If Ford had gone bankrupt with the other two, no one would have been surprised. The surprise was that they didn’t.” To contact the reporter on this story: Keith Naughton in Dearborn, Michigan, at Knaughton3@bloomberg.net
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Ford Reports $2.7 Billion Annual Profit After Record Loss, Beats Estimates
