By on October 26, 2010

Ford’s profitability outstripped even yesterday‘s $1.37b estimate, coming in at a whopping $1.68b, as Ford made mad money in the North American market in the 3rd Quarter of this year, for a fifth consecutive profitable quarter. Global revenue was down by about $1b, but excluding Volvo from Q33 2009 results, revenue was actually up $1.7b. $1.6b of Ford’s profitability came from North America, as its most crucial market carried the company over weak overseas results. And with $900m in positive cash flow, Ford says its “automotive cash” will equal its debt by the year’s end, sooner than it had previously forecast. Ford paid of $2b of its revolving credit line last quarter, and plans to pay off the final $3.6b it owes the UAW VEBA trust in Q4. By the end of the year, Ford estimates it will have reduced its overall debt by $10.8b over the course of 2010. Hit the jump for a few key slides from Ford’s Q3 financial presentation.

Ford’s complete slide set can be found here in PDF format, but we’ve assembled a few of the most telling slides here.

Clearly North America is where it’s happening for Ford.

But where is Ford pulling those profits from? Volume and market share are up, and as identified yesterday, Net Pricing is a major contributor. Selling Fiestas for more than the cost of a Corolla is a great way to inflate already-healthy profits. But mix is important as well. Much of Ford’s volume gains have been in profitable trucks, as the F-Series is having one of its better years in some time.

After all, Ford’s North American market share actually declined significantly in the third quarter… but its retail share actually increased. This seems to prove that Ford is getting off the fleet-sales jag that has brought overall sales levels up, and has particularly buoyed the Detroit firms. And why not? Ford is making enough money due to consumers choosing its more profitable products, and by securing better transaction prices for its vehicles. Though Ford ran at 30 percent fleet for most of the year, it hasn’t seemed to hurt demand, and Ford’s proving that it can lay off the “empty calorie” volume and focus on making money.

And making money it is. If Ford can end the year with more cash than debt and keep its sales and pricing momentum up into next year, when key products like the 2012 Focus launch, it will cement the Blue Oval’s status as the Detroit automaker to beat.

Get the latest TTAC e-Newsletter!

24 Comments on “Ford Reports $1.7b Profit For Q3...”


  • avatar
    Bancho

    Now it would be good to see them use some of that money to pay down debt. I like where they’re going and hope they keep it up.

  • avatar

    Good to see… and what’s more, the increase is driven by NA sales, and not high demand for Buicks in China.

    • 0 avatar
      mikey

      Yes it is good to see. Kudos to Bill Ford for having the guts to hand the reins over to an outsider.

       I guess it proves that good management is the key to success.

    • 0 avatar

      And unfortunately for many companies (not just GM or Chrysler) the legacies of bad management tend to linger long past when those clowns are long gone.

      Ford has those automakers to thank for much of the initial bump in sales and favorable attention. Fortunately for Ford, it had the product to back it up, either on the lots or on the truck. I expected the initial upturn in Ford’s fortunes; the continued success is a very pleasant and welcome surprise.

  • avatar
    bomberpete

    My investment has doubled in the past year and I like where they’re going too. Paying down debt should be first priority, but this Lincoln-Mercury situation could turn very bad and expensive if not handled right.

  • avatar
    ComfortablyNumb

    Didn’t Ford have the option of paying their VEBA committment in stock?  I think it’s telling that they decided to pay in cash.  They must believe that stock will end up being more valuable in the long run.

  • avatar
    Redshift

    That noise I just heard should be Z71_Silvy’s head exploding…

  • avatar
    SherbornSean

    The big news is that revenues per vehicle are much higher. Likely a combination of sync/mytouch popularity, high quality/high price new vehicles, and the overall market being in decent shape. 

    In the US, Ford is in great shape.  Globally, they don’t have it together.  Do they need to? 

  • avatar
    carguy

    Great news for Ford and an impressive product led turnaround for the company. Time to call off the Ford deathwatch.

  • avatar
    mikey

    I only hope that the powers to be at GM can look at this as proof that the domestic UAW/CAW companies can compete with the tranplants.

     

    • 0 avatar

      I hope the UAW/CAW look at this in a similar light, and respond accordingly… by cutting back on the “we want ours” rhetoric and recognizing a few years of sacrifice and lower (more realistic) wages means a much better chance for continued success down the line.
       
      Yes, even for the Tier Two guys.
       
      That really seems to be the greater issue. I wouldn’t bet on which one happens first, if at all.

    • 0 avatar
      gslippy

      @mikey:
      I’ll give you that one, but I doubt GM can do it.  Ford’s success is based largely on good products, but also anti-bailout love from consumers, and good team building by Alan Mulally.  As much as I’m sure he’d rather not have to deal with the UAW/CAW, he seems to have done so in a productive fashion.  I say good for both parties.

      The interview with him was very impressive: http://www.thetruthaboutcars.com/2010/10/a-nice-chat-with-alan-the-ford-guy/

  • avatar
    N Number

    Can we assume that the real reason for these impressive profits are the savings from the continued use of live axles in Mustangs?

  • avatar

    I think we all know that TTAC’s Panther Appreciation Week was responsible for Ford’s impressive Q3 earnings. That’s why you guys are the Best and Brightest, especially psarhjinian.

  • avatar
    cdnsfan27

    Ford is making it hard on people who would normally buy a 2-3 year old vehicle as the refreshes are significantly better than the vehicles they replaced, yet the older models have retained a substantial portion of their value. The new vehicles have great engines with more power and better fuel economy while the interiors are light years ahead of what Ford used to produce. Kudos Ford and Mr. M you greatly deserve the profits you are now earning. Just wished I would have had the money a few years ago to invest in your stock.

  • avatar

    Who would have thought that building cars that the consumer actually likes, would prove so profitable for Ford? Not only has this been the best Q3 ever for Ford, but F has double in value over the past year. Ford proves to be only member of the Big Three that remains competitive with international brands such as Nissan and Toyota. Both of which are expected to see a weakening dollar take a dent out of profits. F is definitely a keeper. Check out Ford’s performance vs International competitors.
     
    Ford vs US Auto Sales- http://www.hiddenlevers.com/hl/u?dcOgZb
     
     
    Auto sales may continue to rise, but a strengthening Yen will hurt profits for both companies.
     
    Nissan vs US Auto Sales- http://www.hiddenlevers.com/hl/u?bimJY7
     
     
    Toyota vs US Auto Sales- http://www.hiddenlevers.com/hl/u?d3NXN9

  • avatar

    USA! USA! USA!

    The fact that Ford is making more money in North America must be heartening. They still have other problems, but any good news is great at this point, obviously.

  • avatar
    TrailerTrash

    Listening to the Bloomberg channel on satellite radio and a Ford CEFO(?) speak was interesting for 2 reasons.

    First, when asked if Ford thought GM got an uneven advantage with the wiping out of its debt in bankruptcy, he said absolutely NO!
    In fact Ford thinks the opposite. Bankruptcy is a horrid business plan and should be avoided at all cost.
    The disruption to the company, internally and other, is not to wished for.
    Bankruptcy was not good for GM.
    Next, Ford decided at least a year ago, that paying down its debt was the big goal next.
    Earlier, in 2008 and 09 when the economy was tanking, investment into R&D was kept the Job #1.
    That paid off.

    Now it is paying off debt and this is the reason for profit…in my opinion.

  • avatar
    rachmiel99

    Used part of my profits from Ford stock to buy a new Mustang Convertible.  Win-win.  :-)

  • avatar
    Telegraph Road

    It seems that the CNN/Money/Fortune Businessperson of the Year voting is coming down to a final round of Alan Mulally vs Steven Jobs.  Mulally is crushing Warren Buffett in the semi-final round (95% to 5%). In the previous round Buffett defeated Ratan Tata.


Back to TopLeave a Reply

You must be logged in to post a comment.

Subscribe without commenting

Recent Comments

New Car Research

Get a Free Dealer Quote

Staff

  • Contributing Writers

  • Jack Baruth, United States
  • Brendan McAleer, Canada
  • Marcelo De Vasconcellos, Brazil
  • Vojta Dobes, Czech Republic
  • Matthias Gasnier, Australia
  • W. Christian 'Mental' Ward, Abu Dhabi
  • Mark Stevenson, Canada
  • Cameron Aubernon, United States
  • J Emerson, United States