By on January 28, 2010

The Ford Motor Company [full results in PDF format here] earned net income of $2.7b last year, on pre-tax operating profits of $454m. The company enjoyed a strong fourth quarter with $868m in net income and an after-tax operating profit of $1.6b (excluding special items). Ford Motor Credit [full release in PDF format here] earned $1.3b in net income and $2b in pre-tax operating profit last year. Ford Credit’s receivables were down at the end of 2009 compared to 2008, with $93b receivable compared to $116b at the end of 2008, and leverage of 7.3 to 1.

Ford Motor’s revenue actually fell by about $20b in 2009, but profit was achieved through some $5b in

Automotive structural cost reductions… reflecting primarily lower manufacturing and engineering costs, a reduction in pension and retiree health care expenses, and lower advertising and sales costs as Ford completed major restructuring actions.

But if you break Ford’s operating profit down, it’s clear that the automotive sector still loses money (about $1.4b last year on $3oom cash burn), and relied on about $1.8b in financial services sector profit to clear the $454m operating profit number. Nearly half a billion dollars on an operating basis is still profit, but the core business clearly still has some signs of weakness.

The flip side to this is the fact that Ford closed the year strong with impressive fourth quarter results. The fourth quarter saw huge improvements in revenue ($35.4b) and automotive sector operating results (over $1b) compared to 2009 as a whole.

North American operations saw its revenue rise about $4.5b to $15.8b, on $707m operating profit. South America and Europe had operting gains in the $300m range on revenue improvements of about a billion dollars each. Africa/Asia Pacific continues to be a disappointing sector for Ford, with operating profit of under $20m only modest improvements in revenue. Meanwhile, Volvo got its act together, losing “only” $32m on an operating basis, which compares nicely to 2008′s $736m loss.

Ultimately, Ford ended the year with $25.5 billion of Automotive gross cash and $34.3 billion in Automotive debt. Still,

As a result of Ford’s 2009 U.S. financial performance, the company will pay profit sharing to 43,000 eligible U.S. hourly employees consistent with the 2007 UAW-Ford Collective Bargaining Agreement. The average amount is expected to be approximately $450 per eligible employee.  As previously announced, Ford is not awarding salaried employee performance bonuses globally under the company’s bonus plan for 2009 company performance. However, the company did announce that U.S. salaried employees will receive merit increases in 2010, and the company’s 401(k) matching program was reinstated on Jan. 1, 2010.

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37 Comments on “Ford, Ford Credit Record 2009 Profit...”


  • avatar

    This is no news to people who know a little bit about this business.

    When I worked for the People’s Car Factory, in a VERY GOOD YEAR, a third of the profits was made with new cars, a third with financing, a third with parts. 2009 definitely wasn’t a good year.

    Now when car companies let go of their captive financing arm (GMAC) and make a mess out of their parts business (Delphi, Visteon) no wonder that they have problems.

  • avatar
    panzerfaust

    Ford’s profits are good news, but that is thoroughly tempered by the fact that Ford finished the year with $34.3 billion in debt, up $7.4 billion from the end of the third quarter. That was largely due to the company taking on $7 billion in debt it owes the UAW retiree health care trust fund. That puts Ford at a disadvantage to GM and Chrysler, which were able to shed debt in bankruptcy court

    • 0 avatar
      rnc

      Operating Debt decreased, cash on hand increased. Ford had the option of paying the $7 billion in Stock (similar to what GM and CryCo did in bankruptcy). So they must feel that they can pay it. Yes they are at a disadvantage, but in some ways so are GM and Crysler. CryCo has no products that people want to buy (w/o huge incentives) and GM is still paying the pension benefits for a company that controlled 50% of the market (1,000,000 people) with a company that controls 20%. Ford’s ratio is around 24/17.

    • 0 avatar
      panzerfaust

      I agree.

  • avatar
    FleetofWheel

    Ford should be forced to share their profit with GM and Chrysler because we are all in this together.

    • 0 avatar
      Sinistermisterman

      I’m sorry, I normally reserve my rants for eco-nuts and Prius driver but “Ford should be forced to share their profit with GM and Chrysler” has to be the dumbest thing I’ve read all week. What planet do you live on?

    • 0 avatar
      FleetofWheel

      My ‘share the wealth’ comment was sarcasm. Of course all the eco-nuts and collectivists that monitor this board probably just nodded their heads in agreement and thus they left no reply to my pseudo progressive post.

  • avatar
    ConejoZing

    Congratulations Ford!

  • avatar
    Ion

    That street performer they Shopped into the air is doing a horrible Balducci.

  • avatar
    mikey

    Yes congratulations,you guys have proven that with good management and a union workforce you can do more than just survive.

    I can only hope that GM will do the same, sooner, rather than later {I would be one of those 100k retirees}

  • avatar
    Telegraph Road

    With a prudent leverage ratio of only 7.3 to 1, it should be clear why Ford Credit managed to avoid the cataclysm that befell GMAC, Chrysler Financial, Citibank, Bank of America, etc.

  • avatar
    mtymsi

    Although Ford is at present financially disadvantaged in terms of debt outstanding compared to GM and Chrysler owing to their BKs it seems as though their sales are improving partially as a result of not filing BK and taking government bailout money. It may well prove to be a distinct advantage to Ford in ongoing market share increases and eventually increased profits. With this years introductions of the Fiesta and Focus I think Ford is poised to gain additional marketshare as well. Fords proven quality and reliability is another marketshare increase factor.

    Congratulations Ford, nice performance.

    • 0 avatar
      BDB

      The Fiesta and Focus are going to be big hits especially when gas shoots up again when the economy recovers (and it will, the only thing keeping a lid on oil prices is lack of demand due to the economy).

      Meanwhile General Motors will have the Cruze, but no real B-segment competitor, and Chrysler will be caught with it’s pants down yet again when this happens.

  • avatar
    Mark MacInnis

    Mulalley and his team should be commended for taking the slow, steady, conservative path to return to eminence in the industry: Build interesting and marketable product, build it well, price it fairly, treat suppliers as partners, limit financial risk, be prudent and transparent with the financial markets….

    These results seem to validate the approach.

    Five years ago I wouldn’t have bet a bent farthing for Ford’s chances….bought the stock at 9, ended up selling at around 5….I had too much exposure, as a manager at one of their suppliers, to the sh!tty way they did business.

    Mulalley’s “buck stops here” reboot of Ford will go down in history as a textbook case of reorganization of a large consumer product/ manufacturing company in the face of daunting organizational and market challenges. I’m a big fan of leadership. He’s earned a place in the pantheon with the greats of American industrial history.

    • 0 avatar
      guyincognito

      Slow and conservative path? There is that little matter of the $25 Billion loan they secured with the whole company. That was a pretty ballsy move, and the major reason they made it through the financial crisis without being taken over by the government.

      I do however agree that they deserve to be commended.

  • avatar
    marman

    Let me make sure i have this straight…Ford has 34.4 billion USD of debt yet is paying out profit sharing? Am i missing something here?

  • avatar
    BDB

    I guess we won’t be seeing any more “Ford Death Watches”?

  • avatar
    Z71_Silvy

    Ford stock didn’t move today…and it looks like they are starting 2010 with a 4.65 BILLION dollar loss….or so we shall see on Feb. 8th.

    With Ford’s massive debt load, lackluster products, and a stale economic market….Ford is still hanging on by a hair.

    And a small correction could spell disaster for America’s favorite Government-money taking auto maker.

    • 0 avatar
      mtymsi

      Just knew you wouldn’t be able to resist slamming Ford. At least Ford has publicly traded stock. And speaking of lackluster products do you mean like the new Snooze er I mean Cruze?

    • 0 avatar
      Z71_Silvy

      You mean the Cruze that has 10 standard airbags, 40 MPG highway, and a very high quality interior.

      It sure beats the hideous 2012 Focus……and will get the same mileage as a B-Class Ford (one thing of many that Ford has not figured out how to do is build a vehicle that gets decent gas mileage).

    • 0 avatar
      srogers

      The Cruze NEEDS all those air bags because the unibody is made out of cheese.

      You’d take a Daewoo over a Ford of Europe product?

    • 0 avatar
      Ion

      @ srogers

      You’re asking that question to a man who spends the majority of his time slamming Ford products on 3 separate automotive blogs. I think he’d take a Yugo over a Ford while claiming it was superior to any product Ford could hope to even dream of.

    • 0 avatar
      FromBrazil

      My God Almighty! Really comparing the Cruze to the Euro Focus? Coming to America in 2011?

      See we already get the Focus. Steering is the laser-like, suspension is magical, consumption right on par. Design, though it shows its age, is very acceptable. Only downside, at least w/ the 2.0 Duratec engine is weight of the clutch. What a bitch. Haven’t experienced anything as heavy since the Chevy S10 V6 of circa 1998. Yikes!

      Cruze? Designed like 5 to 8 years ago. Very me too. No originality. And wide open gaping grille is like, so yesterday. As to drive have to experience. And hope in NA it’s better. Down here they’ll just saddle it w/ the 60s lump of a thing they still call an engine.

      Sorry, at least in this category it’s Ford. Hands down.

    • 0 avatar
      Cammy Corrigan

      Are we talking about a different Ford Focus? I’m with Z71_Silvy here. I do not understand the love poured on Euro Fords. I’ve driven more Euro Focuses than I care to remember and all of them had adequate steering, handled like a tank, ropy fuel economy and a cheap and nasty interior. The only good thing I could say about it is that at high speeds, it was quite calm in the car.

      Other than that, I’d leave well alone.

      I would like to try the Cruze at some point.

    • 0 avatar
      FromBrazil

      Miss Corrigan:

      Isn’t the Focus’ suspension and thus handling set up by a British bloke? One of legendary standing and recognition? I can’t recall his name now…

      I can accept and understand any and all of your criticism of the Focus. But as to ride quality? I truly, and respectfully beg to differ.

    • 0 avatar
      Cammy Corrigan

      Mr FromBrazil,

      I don’t care if the guy was Japanese, Hungarian or Australian. A terrible ride is a terrible ride. I’m not trying to pour hate on the Euro-Focus (because enough people do buy them) I just wonder if I’m missing something that everyone else sees? Help me, please, if you have any ideas. I suppose it’s why I love Toyotas, you either see it or you don’t.

      Incidentally, can anyone explain why, after announcing a profitable year, Ford’s stock price is plunging FASTER than Toyota’s?

    • 0 avatar
      FromBrazil

      Miss Corrigan:

      I’m at a loss of words here. It seems like we are at dyametrical ends. I totally respect your opinion. But I can’t see the Euro (and now SAmerican) Focus’ handling as less than stellar. As to Toyota, they are quite competent and well balamced, but for lack of a better word, maybe soniferous?

      I respect your opinion. I truly do. But I can see myself going out for a weekend jaunt in the Focus, but a Corolla?

      I don’t know, and I hate to bring this up, but. My beloved Ford Escort XR3. Belonged to my father, than my brother, than finally to me. I dream of getting one as a garage/weekend car queen. My mother and my sister hated, really loathed the car. Said it was a hateful thing, specially in the curves. Ummm, never harbored such feelings. Felt it held its own pretty well in the curves. I mean, it did make some movements, but just hold steady and it always came through. Don´t know. Pawing in the air here.

      You’re an enthusiast. So am I. Guess then taht’s why different cars appeal to different people. guess it’s not a qestion of what’s best. Guess it’s more like what’s best for me.

      BTW, love reading your stuff. IMO you give a nice Euro centric stance to a very NA site.

      Congratulations.

  • avatar
    skor

    Credit must also go to Bill Ford. It takes a big man to admit that he’s in over his head and step aside, unlike the former bigwigs at GM, who could never be wrong — ever.

  • avatar
    rnc

    What exactly shall we see on February 8th?

    • 0 avatar
      Z71_Silvy

      That date was mentioned as the sale date for Volvo.

      Ford sells Volvo for 1.8 billion…and they post a 4.65 billion loss as they paid 6.45 billion for the company.

      My question is, how low will Ford’s safety rating tank once Volvo is gone and not providing them with the technology?

    • 0 avatar
      rnc

      That value was written off (down) long ago (you know taking non-cash charges to offset cash income during the good years for tax purposes) and they did have good years after that purchase. Additionally once they decided to sell they would have been forced to value at what they thought it would sell for (at that time the appocalypse was occuring) and as they were already going to post a multi-billion dollar loss might as well tack the remainder of volvo’s value on (for tax purposes as well, DTA), so they can show a gain at sale in future year. (+) all of this less any intangibles transferred to ford (safety and all of that has a value)All the sale will do is add $2 billion to ford’s cash position and a slight uptick in one time gains.

      Now I know how you will look at it (while bragging about what a great deal GM got for Saab:)

  • avatar
    littlehulkster

    I am Ford, king of kings. Look upon my works, ye mighty, and despair.


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