
Ford stock jumps past $7.50 a share
Continuing its comeback effort, Ford Motor Co. reported a third-quarter profit of almost $1 billion as it cut costs and improved market share, making money in the crucial North American automotive market for the first time since the first quarter of 2005. Ford, the only one of the three big U.S. carmakers that didn’t file for bankruptcy this year, reported net income of $997 million, or 29 cents a share, for the three months ended Sept. 30. That compared with a net loss of $161 million, or 7 cents a share, in the same quarter a year ago. Revenue for the quarter was $30.9 billion, down $800 million from a year ago. Ford’s operating profit was 26 cents a share excluding one-time items. On that basis, analysts were expecting a loss of 12 cents a share, according to Thomson Reuters. Ford reported a pre-tax operating profit of $357 million in North America, compared with a loss of $2.6 billion in the region a year ago. Ford’s stock was up 61 cents, or almost 9%, to $7.61 in early trading on the New York Stock Exchange. The results mark a further step in Ford’s drive to survive the worst downturn in the global auto market in decades. The Dearborn, Mich., company reported a profit of $2.3 billion in the second quarter, although much of that was due to onetime gains from financial restructuring. Crucially, after burning through $4.7 billion in cash during the first half of the year, Ford reported $1.3 billion in positive cash flow during the third quarter. The company said it ended the quarter with $23.8 billion in cash in its automotive operations, up from $21 billion at the end of the second quarter. “Our third-quarter results clearly show that Ford is making tremendous progress despite the prolonged slump in the global economy,” Chief Executive Alan Mulally said. Ford said $1 billion in cost reductions in its car-making operations helped drive the third-quarter profit, as well as market-share gains in the U.S. and abroad. Through September, Ford accounted for 15.2% of U.S. new-car sales this year, compared with 14.2% for the same period of 2008. Many of those gains came at the expense of American rivals General Motors Co. and Chrysler. Ford said the government’s “cash for clunkers” program, which provided rebates to entice Americans to buy new cars, helped boost sales in the U.S. The company’s Focus compact and Escape sport utility vehicle were among the biggest sellers under the program. A similar program in Europe helped increase sales there. However, Mulally said Ford also made higher profits on the vehicles it sold during the quarter, in part because it offered lower incentives and also because of strong consumer demand for its redesigned F-150 pickup trucks, the revamped Taurus sedan and the Fusion hybrid. “Cash for clunkers helped everybody, but that has come and gone and what we’re seeing now is a fundamental improvement in the industry,” he said. Still, although Ford raised its outlook for 2011 from “break even or better” to “solidly profitable,” it remained cautious in its outlook for 2010, saying it would provide further guidance when it released fourth-quarter results early next year. “We’re just not sure about the strength of the recovery” going into next year, Mulally said. “For right now, we just want to see how this develops.” In particular, he noted that commodity prices are increasing again and that recent surveys have shown weakness in U.S. consumer confidence. The company said it expected to increase production in the fourth quarter and also expected cash flow from automotive operations to be positive in that quarter.