Ford booked 2010 pretax operating profit of $US8.3bn, up exactly that amount year on year, on revenue up $17bn to $120.9bn. Net income was up $3.8bn to $6.6bn ($1.66 a share). A drink, Mr Mulally?
“This was Ford’s highest net income in more than 10 years, as strong products and new investments fuelled improvements in all of the company’s business operations around the world,” the automaker said in a statement.
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Certainly, product has attracted some kudos of late. US commentators have praised the new ‘One Ford’ Fiesta, Focus and (seven-seat) C-Max – which all made it across the Atlantic about 80% as designed in Europe – and the new domestic Explorer, now more crossover than SUV, with an ‘Ecoboost’ V6 replacing a V8. And European critics like the new Focus albeit with minor reservations about retail pricing and softer handling than its much-praised predecessor.
Predicting Ford’s biggest profit in a decade, California-based Edmunds.com, which not only looks at the numbers but can track consumer activity via its car buying guide websites, said: “Car buyers in general have grown more curious about what the company had to offer. By the end of 2010, 18.1% of [website] visitors looked at a Ford model, making it the brand’s highest level of consideration ever on the site – and a dramatic increase from 13.5% consideration at the end of 2009.
Ford’s success has also had an undeniable impact on its competition. According to Edmunds’ “cross-shopping metrics”, every other automaker – from traditional competitors like Chevy and Dodge, to luxury brands like Audi and Mercedes – has had a noticeable increase in shoppers comparing their models to Ford vehicles in the last year.
“In 2010 Ford found a way to compete for the hearts and minds of car buyers across all segments,” said Edmunds’ industry analyst Ivan Drury. “That’s a testament to the company’s product development and its aggressive marketing strategy. Ford has done a great job spreading the word about its technology and fuel economy improvements throughout its entire fleet, and those messages are resonating with consumers.”
The usual Reuters poll out ahead of Ford’s announcement had also promised Good News. Lowered operating costs and boosted sales were expected to have delivered Ford an operating profit of about US$8bn (it actually booked $8.3bn) which, the number crunchers figured, would be the best showing since 2000’s $10.2bn on US industry auto sales 33% higher.
The 17 analysts polled by Thomson Reuters I/B/E/S expected the company to post a quarterly profit of 48 cents per share (the range was 36 to 58), a quarterly profit near $1.7bn on revenues of $30.57bn and an annual profit near $8bn.
What we got was a Q4 pre-tax operating profit of $1.3bn, or a low 30 cents the share, off $322m year on year.
Fourth quarter automotive pre-tax operating profit was $741m, down $173m but the full year result was up $7.2bn to $5.3bn. People are buying new Fords.
“Our 2010 results exceeded our expectations, accelerating our transition from fixing the business fundamentals to delivering profitable growth for all,” said president and CEO Alan Mulally, still on a roll since arriving from Boeing with a simple ‘fix it’ brief from executive chairman Bill Ford in 2006.
Mulally has taken some flak for mortgaging the family silver – as Reuters noted today, the reshaping of Ford was funded by mortgaging most of the company’s assets to borrow $23.5bn, allowing the blue oval to finance new product development while not having to accept bailouts like those taken by General Motors and Chrysler.
But that debt’s getting paid down. According to Reuters, Ford cut its net automotive debt in 2010 and, after it paid debt to a retiree health care trust fund for the United Auto Workers, its key automotive operations had a debt of $22.8bn and cash of $20.3 bn.
Today, Ford said it had cut automotive debt by $14.5bn in 2010, a 43% reduction, which will lower annualised interest expense by over $1bn, and ended the year with automotive gross cash exceeding debt by $1.4 billion.
“Fourth quarter actions reduced automotive debt by $7.3bn, including $2.5bn of newly announced debt reductions to pay down Ford’s revolving credit facility and term loans,” the results statement said.
Some of this hit the fourth quarter bottom line. Q4 net income of $190 million, or 5 cents per share, was off $696m (20 cents a share) year on year because it included negative special items of $1bn “primarily associated with a previously disclosed $960m charge related to the completion of debt conversion offers that reduced outstanding automotive debt by over $1.9bn”.
More good news: Full year North America pre-tax operating profit was $5.4bn, an improvement of over $6bn. South America, Europe and Asia Pacific Africa also reported full year pre-tax operating profits for 2010.
Enjoy that beverage, Alan.
