By Jeff Bennett Of THE WALL STREET JOURNAL
DETROIT (Dow Jones)--Ford Motor Co. (F) reported third-quarter earnings of $1.7 billion--its sixth consecutive quarterly profit--and announced further actions that will bring the company's automotive cash to about equal to its debt by the end of the year.
Earnings per share were 43 cents, compared with 29 cents a year earlier. Excluding items, Ford earned 48 cents, exceeding the 38-cents a share average estimate of analysts surveyed by Thomson Reuters. Revenue was $30.7 billion excluding Volvo Cars operations.
Bolstering the financial performance, Ford also announced it paid down its revolving credit line by $2 billion and will make a cash payment of $3.6 billion Friday to cover the last of its health-care trust obligations. These actions alone will reduce the company's overall automotive debt to $22.8 billion from $27.3 billion at the end of June.
Ford also plans to lower its debt even further by offering two convertible debt securities in the fourth quarter. Holders will be offered a cash premium as an inducement for them to convert the debt into shares of Ford common stock.
"Our performance through the first nine months has clearly exceeded our initial expectations," Ford Chief Financial Officer Lewis Booth said in a statement. "We are now in a period where we are focusing on growing the business profitably around the world following the hard work that has been done by the entire Ford team to fix fundamentals."
-By Jeff Bennett, The Wall Street Journal; 248-204-5542; jeff.bennett@wsj.com;
(Updates with CFO comments, pickup truck sales, business unit breakdown.)
By Jeff Bennett
Of THE WALL STREET JOURNAL
DETROIT (Dow Jones)--Ford Motor Co. (F) continued its turnaround on Tuesday, reporting a third-quarter profit of $1.7 billion on the strength of surging sales from its high-margin pickup trucks. The company also announced a series of actions it will take to further reduce its debt by the end of the year.
Earnings per share were 43 cents, compared with 29 cents a year earlier. Excluding items, Ford earned 48 cents, exceeding the 38-cents a share average estimate of analysts surveyed by Thomson Reuters. Revenue was $30.7 billion excluding Volvo Cars operations.
It was the sixth consecutive quarterly profit for the only U.S. auto maker to avoid filing for bankruptcy last year. Ford is on track to have one of its strongest years ever amid a slowly recovering U.S. economy and an expanded product line that is attracting both large vehicle and subcompact car buyers.
Bolstering the financial performance, Ford also announced it paid down its revolving credit line by $2 billion and will make a cash payment of $3.6 billion on Friday to cover the last of its health-care trust obligations. The Voluntary Employee Beneficiary Association covers 195,000 retirees and their spouses. It was established by the U.S. auto makers and the United Auto Workers as of way of helping the auto maker reduce rising health care costs. The UAW has control of the trust.
These actions alone will reduce the company's overall automotive debt to $22.8 billion from $27.3 billion at the end of June.
Ford also plans to lower its debt even further by offering two convertible debt securities in the fourth quarter. Holders will be offered a cash premium as an inducement for them to convert the debt into shares of Ford common stock.
"Our performance through the first nine months has clearly exceeded our initial expectations," Ford Chief Financial Officer Lewis Booth said in a statement. "We are now in a period where we are focusing on growing the business profitably around the world following the hard work that has been done by the entire Ford team to fix fundamentals."
Booth underscored the Dearborn, Mich.-based company's performance, saying he now expects all of the auto maker's business units to be profitable in the fourth quarter and in 2011. Ford Motor Credit will also be profitable in 2011, although at a lower level than 2010.
"The important thing is the company continues to do well in the key U.S. market," said Morningstar Inc. automotive analyst Dave Whiston. "Improvements in volume and pricing are helping Ford generate cash which can then be used to pay down more debt and eventually get an investment-grade credit rating."
Ford's profit resurgence comes just two years after the company went to Washington D.C. with General Motors Co. and Chrysler Group LLC to discuss the falling U.S. automotive market and seek financial help from the federal government.
GM and Chrysler used government aid to finance restructuring in bankruptcy court. But Ford went forward on its own and was rewarded with increasingly favorable sentiment from U.S. consumers that continues diving consumers to their products as the economy recovers.
In the quarter, Ford's North America unit reported a pre-tax operating profit of $1.6 billion compared with $314 million a year earlier. Revenue jumped to $16.2 billion from $13.4 billion.
Much of that increase was driven by workers who are buying pickup trucks as they return to jobs amid a slowly strengthening economy. The company sold 145,534 of its popular F-series pickup trucks, a 25% increase over the same period last year.
Ford reported a profit in all of its business segments around the world except Europe, which had a pre-tax loss of $196 million compared with a profit of $131 million a year earlier. The decline stems from lower industry volume and higher costs to support new vehicle introductions.
Booth said the Europe unit will be profitable this quarter.
The company also said it expects to boost fourth quarter production by 27,000 cars and trucks compared with the same period a year earlier.
The full-year 2010 U.S. industry volume is now expected to be 11.6 million and 15 million in the 19 markets Ford tracks in Europe.
Ford shares fell 2.6% to $13.78 in premarket trading.
-By Jeff Bennett, The Wall Street Journal; 248-204-5542; jeff.bennett@wsj.com;
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