FORD has returned to profit in North America for the first time in more than four years, a milestone for the car maker which has lost billions of dollars in one of the toughest periods in its history.
Ford reported group-wide earnings of US$1.1 billion ($1.22 billion) for the third quarter and raised its forecasts, suggesting the company would be ''solidly profitable'' in 2011 instead of merely breaking even as previously predicted. The company lost more than $14.6 billion last year.
The United States has officially emerged from recession but the improvement at Ford was of special significance, indicating that the business might finally have turned the corner. Ford's chief executive, Alan Mulally, said the results showed the company was making ''tremendous progress''.
Ford, which lost $US2.8 billion in the same quarter last year, said the better performance was driven by gains in market share, reduced costs and the ''cash-for-clunkers'' programs run by a number of governments to stimulate sales of new cars.
The North American car and truck division posted a pre-tax profit of $US357 million, compared with a loss of $US2.6 billion a year ago, its first quarter in the black since the beginning of 2005. Profits in Europe rose to $US193 million from $US69 million.
Ford said it had moved into positive cash flow of $US1.3 billion during the quarter, having burned through $US4.7 billion in the first half. ''That's a huge deal,'' said the chief financial officer, Lewis Booth. Its shares closed up 8.3 per cent on the New York Stock Exchange at $US7.58.
Mr Mulally attributed much of Ford's recent gains to the strength of its products - which means it has been able to raise the average transaction price of its vehicles even as volumes have fallen - and its success in restructuring its business after the losses began to pile up in 2005. While the bulk of the structural cost reductions are complete, Mr Mulally said Ford would continue to focus on improving its competitiveness.
Ford has managed to survive without a government bail-out, unlike its rivals General Motors and Chrysler. But the company still faces challenges, including a dispute with the United Auto Workers union over pay and conditions.
Ford was also unable to win the same labour concessions granted to GM and Chrysler during the bankruptcy process after a tentative deal was overwhelmingly rejected by rank and file union members.
Mr Mulally said the advantages of escaping bankruptcy and reliance on taxpayer money ''clearly outweigh any potential disadvantages''.
In the near term, Ford said sales were expected to suffer in Europe, Germany in particular, as the government incentive schemes come to an end. The company also noted that recovery in the US and the British economies was expected to be slow.
What do you think?
I think it's great news. They needed no government loans or aid. And they managed to pull themselves from the brink of going out of business to not needing any help at all. They're reliability rating is also going up. Consumer guide called the reliability " World Class "
Good for Ford. I am sure as hell buying another one whenever my insurance company throws me my check for my wrecked fusion.
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