Ford Motor Co. (F) has revealed a profit of $1.76 billion or 46 cents per share (before special items including sales of Volvo cars) in the first quarter of 2010, outperforming the Zacks Consensus Estimate of 31 cents per share. The profit showed a $3.55 billion improvement from a loss of $1.79 billion or 75 cents per share (before special items including sales of Volvo cars) in the first quarter of 2009.
Sales in the quarter escalated 15% to $28.1 billion. Excluding sales of Volvo cars in 2009, sales increased more than 30%. The improvement in results was attributable to strong sales of new products, betterment in global Automotive operations and higher profits at Ford Credit.
Ford Automotive
Ford Automotive recorded a 21% rise in revenues to $25.4 billion. The pre-tax operating profit was $1.2 billion in contrast to a loss of $2 billion a year ago. The improvement reflected favorable net pricing, higher volume and mix.
In North America, revenues shot up 41% to $14.1 billion. The region showed a pre-tax operating profit of $1.2 billion compared to a loss of $665 million a year ago. The improvement was attributable to higher volume, mix and favorable net pricing.
In South America, revenues went up 43% to $2 billion. Pre-tax operating profit in the region was $203 million compared to $63 million a year ago. The increase was due to favorable net pricing, higher volume and mix.
In Europe, revenues increased 33% to $7.7 billion. Pre-tax operating profit was $107 million compared to a loss of $585 million a year ago. The improvement was attributable to lower material costs, higher volumes and higher parts profit.
In Asia-Pacific & Africa, revenues rose 33% to $1.6 billion. Pre-tax operating profit was $23 million compared to a loss of $97 million a year ago. The improvement reflected favorable net pricing, higher joint venture profits in China and favorable exchange rates.
Ford’s Other Automotive – consisting primarily of interest and financing-related costs – depicted a pre-tax loss of $391 million in the quarter.
Financial Services
The Financial Services segment reported a pre-tax operating profit of $815 million compared to a loss of $62 million a year ago. Ford Credit reported a pre-tax operating profit of $828 million, compared with a loss of $36 million a year ago. The increase reflected lower depreciation expense for leased vehicles due to higher auction values and a lower provision for credit losses, offset partially by lower volume.
Financial Position
Ford had cash and marketable securities of $25.3 billion as of March 31, 2010, an improvement from $21.2 billion a year ago. Total Automotive debt increased $700 million to $34.3 billion as of the same period.
The company had Automotive operating-related cash outflow of $100 million during the quarter, as the pre-tax segment operating profit was more than offset by changes in working capital and a $300 million payment to Ford Credit reflecting up-front subvention payment. Capital expenditures reduced to $900 million in the quarter from $1.1 billion a year ago.
Looking Ahead
Ford continues to expect full-year industry sales in the U.S. to be in the range of 11.5 million units to 12.5 million units, including medium and heavy trucks. For the 19 markets in Europe that Ford trades in, full-year industry sales is expected in the range of 13.5 million units to 14.5 million units, including medium and heavy trucks, as before. Capital spending is expected in the range of $4.5 billion to $5 billion as the company continues to focus on its product plan.
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