Ford posts dramatic $2.7-billion profit in 2009
Ford Motor Co. posted a profit of $2.7 billion for the year, a dramatic turnaround for the company, which weathered one of the worst years in the history of the automotive industry in comparatively good health.
“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,” Alan Mulally, Ford’s chief executive, said today.
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 prior to the opening of the stock market, amounted to 86 cents per share and compared to a loss of $14.8 billion, or $6.50, in 2008.
Though he expects Ford to be profitable this year, Mulally warns that the economy remains uncertain.
“Global economic conditions are reviving but remain fragile,” he said.
Ford’s financial performance triggered a profit-sharing payment to 43,000 eligible U.S. hourly employees that is part of the 2007 UAW-Ford Collective Bargaining Agreement. The average amount is expected to be about $450 per eligible employee. Salaried employees, however, will not get the performance bonuses
In morning trading, Ford shares rose 5 cents to $11.60.
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 quarter, Ford said it earned $868 million, or 25 cents a share, compared to a loss of $6 billion, or $2.51 a share, in the same period a year earlier. Revenue dipped 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 ago.
But Ford executives said they remained concerned about the auto company’s high level of debt and how that put the business at a competitive disadvantage to U.S. rivals General Motors and Chrysler Group, which were able to shed billions of dollars in loans through their respective 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 United Auto Workers union.
“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.”
Separately, Ford confirmed it had stopped production of some commercial vans in China because they contained gas pedals built by the same company and similar in design to the component involved in Toyota Motor Corp.’s recall. Under some conditions, the pedal can cause unintended acceleration in a vehicle, according to Toyota.
Although the Toyota recall affects millions of cars, Ford said its use of the pedal is isolated to a vehicle with limited production of less than 2,000 units. The pedals were built by Elkhart, Ind.-based CTS Corp. and went into the diesel version of Ford’s Transit Classic, built by a Chinese joint with Jiangling Motors Co. in Nanchang in southeastern China.
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