By on July 23, 2010

Ford Motor Company has announced its second-quarter results for 2010, and the company says it earned $2.6b over the last three months on $2.9b in operating profit before special items. In a departure from the typical model for domestic automakers, Ford’s growth was largely driven by improvement in North American results: Ford earned $1.9b in pre-tax operating profits in North America after boosting its Ford brand to the top spot in the American market over the first six months of 2010. Ford earned $31.3b in Q2 revenue, a $4.5b improvement over Q2 2009 (a $7.4b improvement excluding Volvo). Ford’s operating cash flow improved by $2.6b despite ending the quarter with $21.9b in cash, a $3.4b drop since the end of Q1. However, that drop in cash-on-hand was the result of a $3.8b debt reduction, and Ford figures its total automotive liquidity (including all credit facilities) is $25.4b. Automotive debt was reduced by about $7b, to $27.3b, the result of both the UAW Retiree Medical Benefit trust buydown and a $3b repayment of a revolving credit line. The shutdown of Mercury has reportedly cost Ford about $229m so far, and Ford expects that amount to equal slightly under half of the total cost of eliminating the brand.

Ford’s results aren’t very surprising given the fact that it Ford brand outsold all other brands over the first half of 2010, but the healthy profit shows that a rumored dependence on fleet sales wasn’t enough of a factor to weaken Ford’s financial results. Though debt levels remain high and its overseas performance remains weak, Ford has proven once again that it’s the healthiest American automaker… if only in terms of its North American market performance.

Full financial release in PDF format here, Q2 results presentation slides in PDF format here, Ford Credit results in PDF format here

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38 Comments on “Ford Reports $2.6b Q2 Profit...”


  • avatar
    John Horner

    Ford really has won the Last Man Standing contest.

  • avatar
    philadlj

    I can think of no better way for Ford to celebrate than by acquiring Ally Bank!

    • 0 avatar
      Dimwit

      Ford Credit doesn’t need it. It’s just another headache. You might as well ask why GM didn’t buy it instead of AmeriCred.

      Ford is steady-as-she-goes. Not spectacular, but good, solid results with a nice conservative pay down on the debt. Those who are always pointing and going “b,b,b,but the debt!” should be taking notes. Long term, Ford’s looking great.

  • avatar
    Z71_Silvy

    So…when does the 4 billion dollar loss on Volvo hit the books…or will it be swept under the rug so that the press releases will look better?

    • 0 avatar
      MikeAR

      The Volvo stake has long since been written off Ford’s books. It’s value had been written down to almost zero before tha sale. Quit trying to throw cold water on the good news.

      I just noticed, you are obviously a Ford hater trying to tear down Ford to make that big steaming pile of crap GM look better.

    • 0 avatar
      mikey

      @mikeAR.. As a domestic supporter I’m very happy with Fords results,it keeps my former UAW/CAW brothers and sisters in a job.

      As a retired GM hourly I can only hope that Fords success will provide inspiration for GM to do build on thier own recent momentum.

      BTW Your final comment,mikeAR puts you on the same level as “Z71 Silvy”

    • 0 avatar
      dkulmacz

      It’s not a $4b loss on Volvo.

      Volvo revenues were included in 2009 results, but are not included in 2010 results. A direct comparison yields an increase of $4.5b in revenue. If you remove Volvo’s roughly $4b in revenues from the 2009 results, however, and make an apples-to-apples comparison . . . the core Ford business has seen a $7.4b revenue increase.

      Them’s the facts.

      Hah!

    • 0 avatar
      gslippy

      Do you believe Ford only when they declare a loss, or would that claim be bogus, too?

  • avatar
    educatordan

    Good for Ford. (BTW I will say the same thing to GM and Chrysler profits.)

    Hopefully Ford can keep the momentum to pay down debt and keep moving in the right direction.

  • avatar
    jamie1 (of Ford)

    Z71_Silvy So…when does the 4 billion dollar loss on Volvo hit the books…or will it be swept under the rug so that the press releases will look better?

    Can you let us know here at Ford about how you came by this number as the team here do not see it anywhere? Just a reminder that our financial results are a matter of SEC regulation. Sweeping things under rugs does not happen at a stock-market quoted company. It is simply not allowed and is not part of our culture.
    I know you have strong views on Ford (for reasons that are not entirely clear). But it is simply impossible to deny that Ford’s plan is working. Profits are up, debt is falling, quality is up and new products are constantly arriving. Your personal views may not change, but you are an increasingly lone voice. Independent research shows that Ford’s positive opinion levels are consistently rising and our consistent market share growth is perfect evidence of that.
    Regards,
    Jay Ward
    Ford Communications

    • 0 avatar
      1996MEdition

      jamie1 (of Ford) – “Sweeping things under rugs does not happen at a stock-market quoted company” – ROFLMAO

      Please don’t post funny stuff like this around lunch time…..I almost blew a mouthful all over my keyboard. Funny stuff…

      Have you not heard of Enron, Delphi, etc……..

    • 0 avatar
      Bancho

      “Have you not heard of Enron, Delphi, etc……..”

      They’re a good part of the reason that the SEC scrutinizes things quite a bit harder now.

    • 0 avatar
      1996MEdition

      Agreed. But, just because there is a law or regulation doesn’t mean that it is obeyed or followed. If that was the case, we wouldn’t have all the discussions on here about speeding tickets and DUI’s, now would we.

    • 0 avatar
      Z71_Silvy

      Just a reminder that our financial results are a matter of SEC regulation. Sweeping things under rugs does not happen at a stock-market quoted company. It is simply not allowed and is not part of our culture.

      Yeah…but this is Ford we’re talking about. They have the same level of honesty as Bernie Madoff, Tom Petters, Enron, etc.

    • 0 avatar
      SherbornSean

      Jamie1,
      Thanks for joining the fray here at TTAC — great to see your input. As you’ll see, we have a real variety of folks posting, many of whom have interesting, well informed opinions.

      And also a few who well, do not. Ignore them and come back again soon!

    • 0 avatar

      Thank you Jamie 1 (of Ford), too. Though I’d say it’s in your best interest to try and understand people like Silvy…They are out there. They CAN make a difference.

      As to the general idea that someone like you is reading this site, kudos to you. We all know how people in lofty places can become isolated. Sown here you can get into the nitty-gritty of people who like cars enogh that they actually take the time to join, register, chime in, and take the risk of having other people offend them, or sometimes even praise them, for their love of cars.

      Granted, “ethusiasts” are not where the general market is. But here you see many different kinds of people. From people who think the only car in the world is a Tahoe (and that despite it all such a thing gets good mileage) to people like me, who have made their peace with the 1.0L engines of this world and their 70hp…

      So read on Jamie1. You’ll certainly help make Ford a better company because of it.

    • 0 avatar
      daga

      Glad to see some spirit there and glad to see the culture flag flying high. Ford had a great quarter as is making some lasting headway, but you seem a little overly righteous considering the tools Ford (and everyone else too) uses to spruce up reported numbers (monthly closing timings, supplier payment times and Ford Credit transfers to and from timed for minimizing working capital and maximizing book values. Also, the timing of dividends from Ford Credit, timing of mark downs of equity interests and goodwill, etc.). I’m sure there’s a whole bunch more that aren’t common knowledge too. But like I said, everybody does it, and so that doesn’t take away from the strong performance this quarter.

  • avatar

    You’re not done yet Ford. Keep working. Keep improving. I’m rooting for you!

  • avatar
    Bancho

    Cue union strife in 3, 2, 1, …

    I’m really happy to see the hard work Ford’s put in paying off. I hope they stick to it and stay hungry.

    • 0 avatar
      educatordan

      The staying hungry is VERY important, +1. When did complacency set in at GM? 1965?

    • 0 avatar
      rnc

      One Ford Plan (standardization accross /regionproduct lines), the union pulls that BS during the next CBA (they will probably get thier way to an extent), but by the next CBA Ford will have made sure that any vehicle sold in the USA will be able to be produced elsewhere and once the old CBA expires, Ford no longer has any obligation to union until the next CBA is signed, you will see a whole lot of US factories closed (rebuilt in the south at later date), a whole lot class B employees break the line and form thier own union (what are they fighting for, the have no pensions, no post retirement healthcare, etc). At that point it is over for the UAW within Ford (and crazy maybe this is what ford really wants to happen). Long term planning/stratagies ect.

    • 0 avatar
      John Horner

      Do you mean to say that if at some time the workers say, “hey, we gave up a lot during the bad times and we want a share of the good times … just like management always gives itself”; that there would be something wrong?

  • avatar
    Dave M.

    Huzzah Ford! As has been said, keep hungry.

    I’ll take a Fusion hybrid wagon, please.

  • avatar
    SV

    Great news for Ford. The debt load is still high, but they’re getting rid of it quickly and apart from that the long-term forecast looks clear.

    Also, the fruits of the One Ford plan are only starting to arrive…it’ll be interesting to see what Ford’s sales/profits are like once the Fiesta and Mk3 Focus are at full steam.

  • avatar
    brettc

    I’m glad that Ford is doing better overall. I’ll be interested to see the sales results for the Fiesta once results come out in early August. I looked at a Fiesta sedan recently and was not impressed when I saw it in person. I like to think a hatchback would be better, but all the dealer had was a sedan. Hopefully others don’t share my opinion of it and Ford sells a lot of them.

  • avatar
    mjz

    My local dealer still has 3 SES hatchbacks, all priced near $20,000 (and not even fully optioned!) sitting on his lot for almost a week. The cheaper SE hatch with NO OPTIONS, stickered at $15,000+ sold in one day. I think they are hitting some price resistance at the high end.

    • 0 avatar
      NulloModo

      I think a lot of what sells depends on the area. Ford is getting better about tailoring model and trim level mix for various markets, but predicting what will sell with what options isn’t easy until you have some data from actual sales results.

      My experience has pretty much run opposite to yours – every SES hatchback we’ve gotten has sold almost immediately, in fact, the last two we got were sold before they even left the truck. We have a few base model sedans though that nobody seems interested in.

  • avatar
    gslippy

    Great news. Keep up the great work.

  • avatar
    SomeDude

    Good job, Ford. At least one manufacturer is moving away from mediocrity and quality fade.

  • avatar
    ra_pro

    Before the cheer choir gets any louder; good news for the stockholders perhaps but I ain’t one of them. I still don’t see a single car that I could imagine myself buying from Ford, not one. In the past Volvo and Jag would interest me but they ain’t no Ford any more. I’ll be convinced when I see a car on Ford lots I wouldn’t mind owning; and with “wouldn’t” mind I am setting the standard fairly low.

    • 0 avatar
      Z71_Silvy

      I still don’t see a single car that I could imagine myself buying from Ford, not one.

      Me neither…Ford is in a dead heat with Toyota to see who can build the largest amount of bland, cheap vehicles on the planet.

    • 0 avatar
      NulloModo

      ra_pro –

      Just out of curiosity, as you say you are setting the bar low, what is it about the current line up you don’t care for? What are some of the cars out that you would consider buying?

      Ford is competitive in pretty much every segment except for RWD luxury sedans and minivans.

  • avatar
    Sinistermisterman

    Although my opinions are always inherently bias towards Ford, I think they are heading in the right direction. Add the new Focus into the equation and they will be onto a winner. The European version is a hoot to drive, so I’m sure the new US version will be equally as good.
    Buuuut… Ford aren’t out of the woods yet with all that debt still hanging around, and with the world economy still wallowing along in the doldrums, they will have to work hard and smart to keep this up.

    On another note, I love reading Silvy’s comments. It’s like having an angry pet Troll where all you have to do to set him off is wave the blue oval in his face.

  • avatar
    Steven Lang

    Hmmmmmm……. Ford’s I would buy…… or recommend…

    Ranger (if C4C ever comes back these vehicles will be inhaled faster than anything short of a Versa)
    Flex (my only wish is that it had been released as a Volvo with a 240-esque exterior and a class leading interior.)
    Mustang (Who wouldn’t?)
    Fiesta (when it comes out)
    Fusion (among my top choices for midsized vehicles in the NA market.)
    MKS (this and the Taurus would need some major discounts to really move. But I would have no trouble offering this as an alternative to the Lexus ES)
    F-150
    Transit

    8 models. Not a bad tally for one manufacturer.

    • 0 avatar
      SomeDude

      “But I would have no trouble offering this [MKS] as an alternative to the Lexus ES…”

      Well, the Hyundai Excel is a better alternative to the Lexus ES, provided that staying alive is on one’s list of priorities.

  • avatar
    daga

    I assume he means a book value loss from purchase, but as someone else noted, they probably wrote that down a while ago.

  • avatar
    european

    To give some creds to Silvy:

    1) Ford doesnt play any major role in China or India. And that are the growing markets.

    2) Yes, Ford is strong in USA, but just there. They are even loosing grounds in Europe.

    3) Ford uglified the front of the US Fiesta (why do they do that? same thing happened with Mazda6). According to mjz and TrailerTrash (let me remind you, TrailerTrash owns a MKS and loves Fords) Fiesta isnt anything special (they both testdrove it). Whatever Nullomondo says shouldnt be taken seriously as he is a Ford salesmen (and they inherently lie!)

    4) the upcoming Focus doesnt do it for me. The back design is stolen from the Kia pro_ceed, the front is just ugly. The interior is way too busy.

    5) The facelifted Mondeo is blant, already demode.

    6) The Kuga wont sell as it will have competition from the new Kia Sportage, VW Tiguans, Audi Q5 etc. It will have the same fate as the Infiniti EX (wont sell, too small/no utilisation for americans).

    7) if the US lineup becomes more europeanized, Ford will tarnish its
    stance in the states. and with the falling sales in Europe, falling sales in the US might worsen things.

    8) Yes, all these Focuses and Fiestas might sell in *SoCal*, but at the end, people will realize they are just paying big bucks for a Ford.
    What an awakening that will be.


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