With its IPO hitting markets, GM has released limited preliminary results that show the firm earned $1.9b to $2.1b in the third quarter of this year. That performance outstripped Ford’s $1.73b Q3 profit, and GM’s $36b in revenue also beat Ford’s $29b figure for the same quarter. GM also announced that it expects to generate positive EBIT in the fourth quarter, although it warned that its Q4 results would not be as strong as the previous three quarters in which GM claims to have earned $4b to $4.2b in net income attributable to shareholders. The projection of weaker Q4 results proves that political considerations weren’t the only factor pushing for an immediate post-election IPO. One note of warning, however: GM has not released complete data on its results, meaning we haven’t seen the impact of GM’s recent debt-cutting moves on cashflow. On the other hand, with a $5b revolving line of credit secured and profits rolling in, GM isn’t likely to be facing liquidity problems in the immediate short term. We’ll wait for full results before we pass final judgment, however.
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.
We’re hardly shocked by the idea that Chrysler won’t turn profit this year. After all, Auburn Hills has barely made its minimum monthly sales volumes (at best, and with rampant incentives and fleet mix) this year, and lost $50m+ in “industrial inefficiencies” on the Jeep Grand Cherokee launch alone [Q2 results analysis here]. With plans to close out the year with a non-stop barrage of product launches and attendant media spending, it would take a minor miracle for Chrysler to break even. But we’ve essentially known this all for some time… what’s truly shocking is that Chrysler’s CEO Sergio Marchionne actually admitted to the media that Chrysler won’t turn a profit.
When Chrysler’s CEO Sergio Marchionne took the stage over the weekend to honor Lee Iacocca with an induction into the Walter P. Chrysler Legacy circle, he admitted to feeling unworthy of honoring Chrysler’s most famous executive in recent memory, and called Ford’s Alan Mulally and the UAW’s Bob King to help share the honor. And being the business-obsessed type he is, Marchionne wasn’t about to let Mulally get on stage without at least a mention of Ford’s just-announced $2.6b profit. And though the recognition and ensuing awkward “moment” helped add to the usual Detroit gala hometown booster vibe, it also highlighted the fact that Chrysler still has yet to announce its Q2 results.
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.
Well, the suspense is over. General Motors announced its Q1 earnings this morning, and for the first time since 2007 the quarterly numbers are positive. GM’s net revenue jumped to nearly $31.5b on strong performances from its North American and GM International Operations (GMIO), and across-the-board sales improvement for the Chevy brand. General Motors Europe was The General’s sole unprofitable division for the quarter, losing half a billion dollars while it waits for a deal on financial assistance to clear. Operating cash flow was $1.75b, with about $755m of that going towards capital expenditures. That left just under a billion dollars in free cash flow, as GM finished the quarter with $35.7b in cash on hand. Net income attributable to shareholders was $1.068b, less $203m for cumulative dividends, for a total net profit of $865m [Full financial highlights in .doc format available here].
After four straight profitable quarters, Alan Mulally’s forecast today of a “solidly profitable” 2010 shouldn’t come as a huge surprise. But, as Executive Chairman Bill Ford put it to Ford shareholders at the company’s annual meeting [via AP],
It is the very early days in our recovery. We still have a lot of debt
And he’s not kidding. As of the end of Q1 2010, Ford was carrying $34b in debt. And though Ford faces a higher cost of borrowing because of its staggering debts, Bill Ford was clear that he wouldn’t trade places with Ford’s Detroit competitors, which cleaned out their balance books, at the expense of government bailouts and accompanying PR problems. After all, while GM and Chrysler were rebuilding, Ford managed to outperform both of them last year by gaining sales and market share. And Ford’s leadership sees that momentum carrying forward into next year.
With over 8,000 pre-orders already logged, Reuters reports that Nissan is well on its way to selling out its capacity-constrained, 25,000-unit first-year production run of Leaf EVs. Better yet, Nissan’s North America director of product planning and strategy Mark Perry says that, with those sales volumes, the Leaf will actually turn a profit for Nissan. He tells Reuters:
We are making money at the price that we announced. We priced the car to be affordable. We priced it for mass adoption
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.
Building on solid financial results in the fourth quarter of last year, Hyundai has announced today that it turned a net profit of about $1.02b (as in billion) in Q1 2010. That shatters a previous record of $650m, recorded in the second quarter of last year, and eclipses last year’s $203m Q1 net profit. According to the Detroit News, Hyundai raised sales revenue by nearly 40 percent last quarter, with global gross receipts hitting $7.6b. Sales volume was up 36.6 percent, to 842,037 units. Though the Chinese and Indian markets drove growth with 48 and 34 percent volume increases respectively, the big news comes from the US, where Hyundai’s volume grew 78.3 percent and revenue gained 61.5 percent. And if Hyundai’s margins seem surprisingly attractive, consider that the dollar’s recent declines against the Korean Won bled off some of that US-market profit. Oh, and that billion-dollar profit doesn’t include results from Hyundai’s sister-firm Kia, which reports Q1 financials tomorrow. Get down with your bad self, Hyundai!
Don’t ask Chairman/CEO Ed Whitacre. His only comments so far on GM’s Q1 2010 performance comes from a memo leaked to Reuters, in which he says:
In January, I said we could earn a profit in 2010, if everything falls into place. Our first quarter financial results will show us an important milestone, and I’m pleased to say that I anticipate solid operating results when we report our first quarter financials in May
Poor Sergio Marchionne… the man can’t go anywhere without being interrupted. The Fiat/Chrysler CEO’s speech today in the buildup to the New York Auto Show was interrupted twice, once by the the ubiquitous Teamster protesters, and once by a test of the hotel’s fire alarm system. But then, maybe people would let him speak if he had more to offer than the same lukewarm assurances that everything is going marvelously in Chrysler-land. The Detroit News summarizes his speech by saying Marchionne believes Chrysler will sell the 1.1m vehicles in needs to break even this year, and that it will do so without getting pulled into an incentive war.Which would be hard to do anyway, considering Chrysler spends more on incentives at “normal” levels than any of its competitors.
Chinese battery maker and aspiring automaker BYD earned $215m in the fourth quarter of 2009, bringing its net profit for last year to $555.2m, reports Automotive News [sub]. BYD’s performance outstripped analyst estimates, which projected fourth quarter profits of $130.5m, and full-year profits of $473.2m. Though the Chinese auto market grew 46 percent to 1.6m vehicles, 47 percent of BYD’s 2009 sales came from the firm’s cell phone battery business, which is expected to give back recent gains as the global economic crisis takes its toll. Not so with BYD’s auto business: the firm has raised its 2010 car sales projections 14 percent, with sales of 800k foreseen. And as China’s car market takes off, BYD, which has one of the nation’s best-selling cars in its F3 compact, is expected to keep growing. Says one JP Morgan analyst:
BYD is a company that can’t be underestimated. If the Chinese vehicle market expands 10 percent this year BYD’s sales will grow at least 40 percent — 50 or even 60 percent is also a possibility.
Agressive cost-cutting and improved sales yielded $1.68b in net profit for Toyota in the three months ending December 31, reports a press release in the WSJ. Sales revenue climbed 10 percent to $58.2b in the October-December quarter, boosting operating profit to about $2b. This quarter alone though, Toyota reckons the recall could cost the company $2b in repair costs and lost sales. For the fiscal year, ending on March 31, Toyota says the final impact should be limited to about $900m in losses on an operating basis, and has revised its fiscal year net profit projection to about $900m (compared to a $2.2b loss projected in November).
Hyundai’s fourth quarter profit quadrupled over last year’s fourth quarter results, reports Bloomberg, as net income hit $822m, up from $210m in the same period last year. Operating profit rose 44 percent to $722m. This comes despite an increase in the value of the Won, which has reduced profit on Hyundais exports, which make up half the firm’s revenue. And unlike other automotive firms reaping surprise year-end profits (like Ford), Hyundai’s gains come from increased sales rather than cost-cutting. Hyundai’s overall sales rose 14 percent to 3.2 million units last year, driven by growth in the US and Indian markets. Hyundai finished 2009 with just over five percent of the world market. Hyundai expects sales to rise 11 percent in 2010, and the firm is looking to take advantage of Toyota’s weakness by offering conquest incentives like those now offered by GM, Ford and Chrysler.