Ford Working Its Way Back To Health, Pays Off Debt, Sells More Cars

Ford continues to work its way back to health, posting a solid second quarter before the bell on Tuesday despite seeing its net income fall 8% from last year to $2.4 billion. Investing in product development around the world, including China, Ford faced higher commodity and structural costs, while it saw sales increase and it paid off its debt.

Chrysler also posted earnings, with a deeper loss as compared to last year despite rising revenue, as the automaker pays the U.S. and Canadian government for their bailouts.

The only one of Detroit’s Big Three not to file for bankruptcy, Ford earned $2.4 billion in the second quarter. Adjusted to exclude one-time costs such as paying off its debt and payroll reduction costs, Ford earned $2.9 billion or 65 cents per share, above Wall Street’s estimate of 60 cents.

Revenue grew 13% to $35.5 billion, above estimates of $32.15 billion. Every geographic location showed higher revenue, but only North America saw its profit rise. Ford noted that higher costs for steel, copper, investment in future products, and inflation eroded profits, despite the strong performance.

“We delivered very good second quarter results while growing the business globally and serving more customers in every region,” said Alan Mulally, Ford president and CEO. “Despite an uncertain business environment, we further strengthened our balance sheet and continued to invest for the future.”

Ford paid off $2.6 billion in debt, bringing its total debt outstanding to $14 billion, as the company works its way to investment grade ratings again. It also spent $110 million in employee reduction.

Total market share in the U.S. in the first half of the year averaged 16.7%, while in Europe it stood at 8.4%. Ford expects that number to be equal or improved from 2010 in the second half of the year. Ford also reiterated its full-year U.S. sales guidance of 13 to 13.5 million units, while it trimmed its European estimate to 14.8 to 15.3 million units, from 14.5 to 15.5 million units.

Chrysler posted a net loss of $370 million, down from a net loss of $172 million a year earlier. The loss came despite revenue growth of 30% to $13.7 billion and a 19% increase in global sales. Chrysler, bailed out back in 2009, is now operated by Sergio Marchionne’s Fiat, an Italian automaker. (Read Fiat To Take Chrysler Stake To 57%, Plans To Buy 6% From Treasury).

Shares in Ford traded up in pre-market trading but fell to a low soon after the opening bell, amid general equity market weakness. By 10:15 Am, shares were trading up 0.2% or 3 cents to $13.20.


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