Ford reports record $1.7 billion Q3 profit

Jamie LaReau, Automotive News, a Crain publication

26 Oct 2010

Ford Q3 press release

DETROIT -- Ford Motor Co. reported record third quarter net income of $1.7 billion (Euro 1.23 billion) and said it will speed up steps to pare debt.

The automaker's sixth straight quarterly profit compared with net income of $997 million a year earlier. Ford also said it will boost its forecast for fourth-quarter production in North America by 20 000 units.

Revenue fell $1.3 billion from a year earlier to $29 billion, reflecting the August sale of Volvo. Excluding Volvo, revenue rose $1.7 billion.

“Delivering world class products and aggressively restructuring our business has enabled us to profitably grow even at low industry volumes in key regions,” CEO Alan Mulally said in a statement. “The key drivers for improvement in 2011 will be our growing product strength, a gradually strengthening economy and an unrelenting focus on improving the competitiveness of all our operations.”

The automaker said it will reduce its debt by a total of $10.8 billion this year, bringing it to a zero net debt position by year-end.

In the second quarter, Ford had said it would have zero net debt by the end of 2011. Zero net debt means Ford will have the same amount of cash as it does debt, and will help the automaker return to an investment-grade credit rating.

“It's important; it's another step (toward becoming investment grade) but we need to take steps to continue to improve the cash position of the business and continued improvement of the balance sheet,” said Neil Schloss, Ford's treasurer.

Ford ended the third quarter with $26.4 billion of automotive debt. After it pays off its VEBA obligation on Friday, it will have $22.8 billion in debt. Ford ended the quarter with $23.8 billion in automotive gross cash.

Excluding special items, Ford reported a pre-tax operating profit of $2.1 billion, an improvement of $1.1 billion from a year earlier.

Under the changed production forecast, Ford will build 590 000 vehicles this quarter in North America.

For the third quarter, Ford Credit reported net income of $497 million, up from $427 million a year earlier.