In a spirited finish, Ford ends 2009 with $2.7 billion in profit
Ford Motor Co. posted a profit of $2.7 billion for 2009, a dramatic turnaround for the company, which weathered one of the worst years in the history of the automotive industry in comparatively good health.
Separately, Ford confirmed it had stopped making a limited-production commercial van in China because the vehicle contained gas pedals that were similar in design to the component involved in Toyota Motor Corp.'s massive recall. Under some conditions, the pedal can cause unintended acceleration in a vehicle, according to Toyota.
But in a conference call Thursday, Ford executives were upbeat about the automaker’s future, saying that it should be profitable this year, despite continuing economic turmoil.
“While we still face significant business environment challenges ahead, 2009 was a pivotal year for Ford and the strongest proof yet” of the success of the company’s effort to forge “a path toward profitable growth by working together as one team, leveraging our global scale,” said Alan Mulally, Ford’s chief executive.
“Global economic conditions are reviving but remain fragile,” he said.
In the U.S., sales of Ford brands in the fourth quarter rose 13% from the same period a year earlier. The company grabbed 15.3% of the U.S. auto market, its first full-year gain since 1995.
“In every part of the world, we are providing customers with great products, building a stronger business and contributing to a better world,” Mulally said. “Our progress has helped us gain market share in most of our major markets.”
Ford’s profit, announced before the opening of the stock market, amounted to 86 cents a share and compared with a loss of $14.8 billion, or $6.50 a share, in 2008. It was the automaker’s first annual profit since 2005.
Ford’s results represented a “modest beat” over Wall Street expectations, said Itay Michaeli, an industry analyst with Citigroup Global Markets in New York.
“The key story going forward is whether Ford can sustain pricing momentum and cost control during an upturn,” Michaeli said.
Other analysts believe it can.
“If they can make $2.7 billion in one of the worst auto years in history, once sales really start to pick up, Ford should be a good-looking company,” said John Wolkonowicz, an analyst at IHS Global Insight in Lexington, Mass.
In addition to an improved vehicle lineup, he said, Ford should benefit from the “hobbling” of rival Toyota Motor Corp. by its massive recall and problems involving faulty floor mats, gas pedal assemblies and unintended vehicle acceleration.
In the last month, Ford has announced plans to recall or hire as many as 2,200 employees in the next two years.
Ford’s financial performance last year triggered a profit-sharing payment to 43,000 eligible U.S. hourly employees under the 2007 collective bargaining agreement with the United Auto Workers union. The average amount is expected to be about $450 per eligible employee. Salaried employees, however, will not get the performance bonuses.
Ford shares fell 14 cents to close at $11.41.
Revenue in 2009 fell to $118.3 billion from $138.1 billion, a reflection of lower sales resulting from the global economic slump.
For the fourth quarter, Ford said it earned $868 million, or 25 cents a share, compared with a loss of $6 billion, or $2.51 a share, in the same period a year earlier. Revenue dropped to $29 billion from $34.5 billion.
The company ended the year with $25.5 billion in cash, more than double what it had a year earlier.
But Ford executives said they remained concerned about the auto company’s high level of debt and how that puts the business at a competitive disadvantage to U.S. rivals General Motors Co. and Chrysler Group, which were able to shed billions of dollars in loans through their bankruptcy reorganizations last year.
Ford ended 2009 with $34.3 billion in debt, up $7.4 billion from the end of the third quarter. The increase was a result of Ford borrowing $7 billion to fund a retiree healthcare trust fund run by the UAW.
“We are fully aware that we have too much debt on our balance sheet. . . . We will continue to work on it,” said Chief Financial Officer Lewis Booth. “We still have a lot of work to do to improve the business.”
Ford officials called the production stoppage in China an “isolated” incident sparked by an internal review that examined whether any of the issues dogging Toyota would affect Ford products.
Although the Toyota recall affects millions of cars, Ford said it used the pedal in fewer than 2,000 vehicles. The pedals were made by Elkhart, Ind.-based CTS Corp. -- the same company that made the pedals involved in the Toyota recall -- and went into the diesel version of Ford’s Transit Classic, built by Jiangling Motors Corp. in Nanchang in southeastern China.