Ford swings to surprise quarterly profit
Ford swings to surprise quarterly profit
By Bernard Simon in Toronto
Copyright The Financial Times Limited 2007
Published: July 26 2007 13:14 | Last updated: July 26 2007 13:14
Ford Motor on Thursday reported an unexpected second-quarter profit – its first in almost two years – fuelled by cost reductions, improved pricing and the sale of its Aston Martin sports car division.
The second-quarter net profit of $750m, or 31 cents a share, compares with a loss of $317m loss, or 17 cents a share, a year earlier. Revenues grew to $44.2bn from $41.9bn.
The Detroit-based carmaker confirmed that it was exploring “in greater detail” the sale of Jaguar and Land Rover, and reviewing the future of Sweden-based Volvo. It said that the Volvo review was likely to be concluded before the end of the year.
Alan Mulally, chief executive, said he was “very encouraged by the significant progress we are making” to implement Ford’s Way Forward recovery plan.
“We continue to focus on the four priorities of our plan”, Mr Mulally added, “restructuring the business to operate profitably, accelerating the development of new products that our customers want and value, funding our plan and improving our balance sheet, and working even more effectively together as one global Ford team”.
Ford said it achieved $1.1bn in cost savings in first half of 2007, including $600m in the second quarter. Buyouts and early retirements helped reduce its North American payroll by about 6,400 employees between April and June.
Second-quarter pre-tax profits from automotive operations were $378m, compared with a $716m loss a year earlier.
Although the carmaker’s North American operations remained in the red, operating losses in the region shrank by almost two-thirds. The pre-tax loss in North America dropped to $279m from $789m, largely because of improved pricing and cost reductions, partly offset by lower sales volumes.
Ford Europe’s pre-tax profit grew by 42 per cent to $262m, due to favourable pricing and higher volumes, partly offset by higher manufacturing costs.
The Premier Automotive Group, which comprises Volvo, Jaguar and Land Rover, recovered to a $140m pre-tax profit from a $162m loss a year earlier, with improved results from all three brands.
Earnings in South America more than doubled to $255m. Earnings from Asia, Australia and Africa climbed more than sixfold to $26m, due mainly to lower costs and a strong performance in China, where sales were 22 per cent higher in the first six months of 2007 than a year earlier.
However, net income at the carmaker’s financial services arm, Ford Motor Credit, fell to $62m from $304m. The deterioration was ascribed to higher borrowing costs, lower credit loss reserve reductions, higher depreciation expense for leased vehicles, and higher losses related to valuation adjustments on derivatives.
The parent company’s earnings from continuing operations, excluding special items, totalled $258m, or 13 cents a share, in the second quarter, versus a loss of $118m, or 6 cents, a year earlier.
By Bernard Simon in Toronto
Copyright The Financial Times Limited 2007
Published: July 26 2007 13:14 | Last updated: July 26 2007 13:14
Ford Motor on Thursday reported an unexpected second-quarter profit – its first in almost two years – fuelled by cost reductions, improved pricing and the sale of its Aston Martin sports car division.
The second-quarter net profit of $750m, or 31 cents a share, compares with a loss of $317m loss, or 17 cents a share, a year earlier. Revenues grew to $44.2bn from $41.9bn.
The Detroit-based carmaker confirmed that it was exploring “in greater detail” the sale of Jaguar and Land Rover, and reviewing the future of Sweden-based Volvo. It said that the Volvo review was likely to be concluded before the end of the year.
Alan Mulally, chief executive, said he was “very encouraged by the significant progress we are making” to implement Ford’s Way Forward recovery plan.
“We continue to focus on the four priorities of our plan”, Mr Mulally added, “restructuring the business to operate profitably, accelerating the development of new products that our customers want and value, funding our plan and improving our balance sheet, and working even more effectively together as one global Ford team”.
Ford said it achieved $1.1bn in cost savings in first half of 2007, including $600m in the second quarter. Buyouts and early retirements helped reduce its North American payroll by about 6,400 employees between April and June.
Second-quarter pre-tax profits from automotive operations were $378m, compared with a $716m loss a year earlier.
Although the carmaker’s North American operations remained in the red, operating losses in the region shrank by almost two-thirds. The pre-tax loss in North America dropped to $279m from $789m, largely because of improved pricing and cost reductions, partly offset by lower sales volumes.
Ford Europe’s pre-tax profit grew by 42 per cent to $262m, due to favourable pricing and higher volumes, partly offset by higher manufacturing costs.
The Premier Automotive Group, which comprises Volvo, Jaguar and Land Rover, recovered to a $140m pre-tax profit from a $162m loss a year earlier, with improved results from all three brands.
Earnings in South America more than doubled to $255m. Earnings from Asia, Australia and Africa climbed more than sixfold to $26m, due mainly to lower costs and a strong performance in China, where sales were 22 per cent higher in the first six months of 2007 than a year earlier.
However, net income at the carmaker’s financial services arm, Ford Motor Credit, fell to $62m from $304m. The deterioration was ascribed to higher borrowing costs, lower credit loss reserve reductions, higher depreciation expense for leased vehicles, and higher losses related to valuation adjustments on derivatives.
The parent company’s earnings from continuing operations, excluding special items, totalled $258m, or 13 cents a share, in the second quarter, versus a loss of $118m, or 6 cents, a year earlier.
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