By on April 27, 2010

The Ford Motor Company released its first quarter earnings today [Full report here, Slide presentation here (both PDF)], revealing that it gained over $2b in net profit on rising revenue and improved operating margins. Sales receipts rose to over $28b, and with each of Ford’s regional units posted operating profits, Ford’s gross automotive cash rose by $400m to $25.3b (although operating cash flow was $100m in the red). North American operations earned $1.2b in pre-tax operating profit, South America earned $203m, Europe recorded $107m and Asia-Pacific-Africa brought in $23m. Ford Credit racked up $828 in pre-tax profits, as lower depreciation levels improved results. Despite these fine results, Ford finished the quarter with $34.3b in automotive debt, a $700m increase from the beginning of the year. Ford paid $492m in interest on that debt in the first quarter.

Improvements in revenue and profitability are cause for celebration in Dearborn, but negative cash flow and increases in debt are niggling concerns. Especially when Ford’s CFO Lewis Booth is warning that these Q1 results are better than he expects for the rest of this year. Booth tells the Freep:

It would be unwise to think of the $2 billion as a running rate for the year

Ultimately though, Ford’s sales are up, and results are improving across the company’s global operations, meaning Booth still expects profits, albeit smaller ones, this year. And Ford isn’t trying to hide its optimism, increasing production goals by 30k units in the second quarter. Meanwhile, with 45 cents per share in earnings, Ford’s Q1 results beat Wall Street’s expectations, meaning the company’s stock should stay buoyant. Right now, that’s about all an automaker can ask for.

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17 Comments on “Ford Pulls In $2.08 Billion Q1 Profit...”


  • avatar
    John Horner

    I am kicking myself for not acting on the impulse to buy 10k shares of Ford stock back when it was trading for around a buck a share. Business case studies are going to be written about this turn around.

    • 0 avatar
      Len_A

      John, you & I both! Damn, am I regretting not loading up on it! Ford has had quite a turn-around.

    • 0 avatar
      Lumbergh21

      I told somebody at work to buy it at $1.70 per share. Not only did he not buy it, I didn’t either. We get to kick each other in the behind for not making what seemed to be an obvious purchase at the time (GM and Chrysler both assured of bankruptcy by then). At least I can spread some of the blame to my wife, as she wouldn’t agree to close one of our mutual funds and buy $30k in shares like I wanted to.

  • avatar
    Telegraph Road

    Over a $2 billion profit in Q1? It’s been six months since TTAC Ford Death Watch 49: Gypsies, Tramps, and Thieves when the eloquent author here told us to “get ready to bail out Ford”. Maybe I’ve been drinking too much of “Big Al’s Kool-aid” here in Dearborn with “Crazy Henry’s mob”, but I know Henry ain’t nearly as crazy as he is rich now. Tonight in the bars on Telegraph Rd, “Mulally’s minions” will be toasting “Big Al” with no Kool-aid.

  • avatar

    Kudos to the company that bet on itself, and not on taxpayer-funded bailouts. Long live Ford!

    • 0 avatar
      undrgnd40

      amen. they really do have a good selection. i can tell you my newer ford has been in for one warranty repair in 20k miles, a license plate light assembly. my newer honda at 20k miles had been in for warranty concerns seven times. so far i have been impressed with the product. the ford service department attitudes are still spotty though.

  • avatar
    Chicago Dude

    Ford also mentioned that the $34.3 billion in debt does not count a $3 billion repayment in April. It will be reflected in the Q2 numbers. It’s still a lot of debt, but they seem to be managing thus far.

    I’m still kicking myself for buying at 4 and selling at 6. Never thought I would regret a 50% gain in a couple of months. I’m back in at around 12, so I am definitely watching their finances closely. I still think it’s possible to get a 25-30% gain before the stock market takes another dive.

  • avatar
    saikyan

    Soooo about that Death Watch…

    • 0 avatar
      porschespeed

      I wouldn’t turn that DW off just yet.

      While I applaud Ford’s actions, and believe they have the most viable product mix, the fact is that they are carrying a ton of debt.

      Please do the math on paying back just the $34.3B of ‘automotive’ debt.

      Let’s pretend that everything goes swimmingly and that Ford can pay back $5B per year of that debt. They are on the hook for the next six years.

      In the final analysis, C11 is still a very distinct possibility in the Ford universe.

    • 0 avatar
      Bancho

      If Chicago Dude is right then it’s really 31.3 billion in debt which would be a definite improvement.

  • avatar
    Bunter1

    While I have to agree with porschespeed that they are not totally out of the woods the trees are getting farther apart and this is definately a patch of sunlight breaking through.

    Huzzah to Big Al.

    Sounds like aren’t letting it go to their heads either, keep your eye on the ball guys, I’m pulling for you.

    Get the reliability on the C-max where the Fusion is and you might get a new customer.

    Bunter

  • avatar
    wsn

    A.M. > B.H.O.

    • 0 avatar
      Dave M.

      A.M.>B.H.O.>G.W.B.

      Remember, the first salvo of government assistance happened in Decemver, 2008.

      As much as I didn’t want to see a bailout, I believe the 12/08 and subsequent $$ averted a huge economical disaster.

      I still do believe in personal responsibility, and thus highly doubt (regardless of all the $ being paid back or not), I’ll ever shop GM or Chrysler again.

  • avatar
    Sinistermisterman

    Good news for the blue oval for sure, but how long will it take Ford to start using black ink instead of red in their books? How much debt do they still have?

  • avatar
    Dimwit

    A thing that a lot of people forget is what kind of quality is this debt? Good quality debt is a financial instrument just like cash is. Granted, you can’t take it too far, but I don’t think that Ford will ever be “debt-free”. Say the acceptable rate is $12 billion (and yes, I pulled that out of thin air), Ford’s payback is more like $20 billion. Large, but not unworkable, given the signs in the marketplace.

    In the coming years I wager that holding some of Ford’s paper will be only prudent financial sense for most institutions. GM’s OTOH, will become a crapshoot, with the last ones holding, the losers.

  • avatar
    Lumbergh21

    Why did Ford stock take a dive today on the news that profits were higher than Wall Street projected? It also seems that anybody who is paying attention can identify Ford as the healthiest automaker despite all of the money pumped into Chrysler and GM by the government. Just shows you what a game of chance the stock market has become.

    p.s. Imagine Ford receiving half of the funding that GM got from the feds. How much debt would they be carrying then? Just a thought, but rather than throwing money down a rat hole, investing it in America, whatever you want to call it, where would the US auto manufacturing sector be if that money had been used to bolster the one auto manufacturer that showed any sign of “getting it” and changing the way they were doing business over a year ago?

  • avatar
    Matthew Sullivan

    I bought a cumulative 3000 shares in a few different lots during October of 2008. All the lots were in the low $2 range. I did this inside of an IRA.

    Just as you guys wish you had bought *some*, I wish I had bought *more*. But hindsight is 20-20. At the time, the amount I invested was something I could afford to lose without it really impacting my retirement.

    I still have all the shares. I bought them with the intent of holding on to them for 10+ years. But they have appreciated so much that they are now a material part of my portfolio, which is making me rethink hanging on to them for the long term.


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