Ford Motor Company posted net profits of $866 million during the fourth quarter of 2009 and is optimistic about its prospects for 2010.
Ford’s CEO Alan Mulally said, While we still face significant business environment challenges ahead, 2009 was a pivotal year for Ford and the strongest proof yet that our One Ford plan is working and that we are forging a path toward profitable growth by working together as one team, leveraging our global scale.
Ford reported a full-year net profit of $2.7 billion compared with a loss of $14.8 billion for 2008.
The company posted operating profits of $8 million for the year compared with a $7.3 billion loss in 2008 and reported automotive gross cash of $25.5 billion and $34.3 billion of debt.
The company’s CFO Lewis Booth said the outlook for this year is positive as well. We’re going to be profitable in 2010, he said. Last fall, Ford upgraded its 2011 outlook from break-even or better to solidly profitable.
From 2006 through 2008, Ford posted losses of $30 billion with a record $14.7 billion being lost last year.
Ford is also ramping up its North American production by 20,000 units to 570,000 this quarter. The company’s U.S. market share also grew by 1 percentage point to 15.5% during 2009. Total sales for the year, however, fell 15.4%.
Booth said the company’s profitability in 2009 came, in large part, as the result of the automaker’s debt restructuring efforts and reductions in operating costs. He said reductions in engineering and manufacturing costs, including reductions in the company’s workforce, allowed the company to surpass its full-year debt-reduction goal of $4 billion, by $1.1 billion. Booth said $500 million of that came during the fourth quarter.
The automaker saw cash flow from automotive operations increase to $3.1 billion while limiting cash expenditures to $300 million for the year. For 2008, the company’s total cash burn reached $19.5 billion. Ford expects to post a positive cash flow for the current year as well.
Booth said, We’re encouraged by our cash position, and added, We are also seeing the benefit of our production being ramped up again.
He conceded that the company still faces a number of challenges including maintaining its current inventory levels which are now at 60-days.
Booth also restated the company’s commitment to debt reduction. The most important thing is to return the business to fundamental health and pay down our debt, he said.
Many analysts remain optimistic about Ford’s future but warn that its continued success depends largely on how quickly it can reduce its heavy debt and the continued resurgence of the U.S. economy as a whole.
Industry analyst and president of Autoconomy, LLC Erich Merkle said, If there is any kind of recovery, they [Ford] should be profitable in 2010, and added I think Ford is looking to under-promise and over-deliver.
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