Ford Motor Credit boosted net income $143m year on year to $556m in the second quarter of 2010.
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On a pre-tax basis, the automaker’s captive finance unit earned $888m in the second quarter, compared with $646m in the previous year. It earned $1.7bn pretax in the first half versus $610m in H1 2009.
Ford said pre-tax earnings were helped by a lower provision for credit losses and lower depreciation expense for leased vehicles due to higher auction values.
These factors were offset partially by the non-recurrence of net gains related to unhedged currency exposure from cross-border intercompany lending and lower volume.
“Economic indicators are mixed, but overall continue to trend upward,” chairman and CEO Mike Bannister said. “More favorable external conditions, combined with our own strong and consistent originations and servicing practices, continued to drive positive results in the second quarter. We are anticipating strong results for the full year.”
Net receivables on 30 June totalled $85bn, compared with $93bn at the end of 2009. Managed receivables were $87bn, down from $95bn primarily due to the transition of Jaguar, Land Rover, Mazda, and Volvo financing to other finance providers, lower industry and financing volumes in 2009 and 2010 compared with prior years, and changes in currency exchange rates.
Ford Credit now expects full year 2010 profits to be higher than its 2009 profits but cautioned the second half would be lower than the first because it expects smaller improvements in the provision for credit losses and depreciation expense for leased vehicles compared with the improvements during the first half.
For full year 2011, it expects to continue to be “solidly profitable” but at a lower level than in 2010 primarily reflecting the non-recurrence of lower depreciation expense for leased vehicles and the non-recurrence of credit loss reserve reductions of the same magnitude as 2010.”
