Ford sees light at end of tunnel

Friday, April 24, 2009 at 6:33 PM Posted by Beijing News


Ford Motor Co. said Friday it remains on a slow road to recovery by 2011 without help from the government as it posted a quarterly loss of 1.4 billion dollars that was not as bad as feared.

The automaker, the only member of the Detroit Big Three that has not received emergency government aid, said it has enough cash to keep its plans on track.

"Our results in the first quarter reflected the extremely difficult business environment and weak demand for autos around the world," said Ford president and chief executive Alan Mulally.

"Despite the challenges, Ford made strong progress on our transformation plan by gaining share with strong new products, slowing operating-related cash outflows, reducing outstanding debt, lowering our structural costs and reaching new agreements with the UAW United Auto Workers."

Ford said it "remains on track to meet or beat its financial targets based on current planning assumptions, including the target for its overall and North American automotive pre-tax results to be break-even or better in 2011, excluding special items."

Ford said it ended the first quarter with 21.3 billion dollars in cash and reiterated that "based on current planning assumptions it does not expect to seek a bridge loan from the US government."

Shares in Ford leapt 14.7 percent in late morning trade.

"Although Ford isn't earning any money, it is earning the market's faith in its turnaround effort, as the company maintains it is on track to meet or beat its financial targets and that it does not expect to seek a bridge loan from the US government," said Patrick O'Hare, analyst at .

"For now, Ford seems to be benefiting from the view that it is the best of a bad lot."

For all of 2008, Ford posted a whopping loss of 14.57 billion dollars, as the auto market collapsed in the latter part of the year.

Ford's loss for the past quarter translated to 75 cents per share, not as bad as feared on Wall Street, where analysts were expecting a deficit of 1.23 dollars per share.

First quarter revenue, excluding special items, was 24.8 billion, down sharply from 39.2 billion a year due to lower sales volume and unfavorable exchange rates.

Analysts praised Ford for cutting its costs and reducing so-called cash burn.

Himanshu Patel at JPMorgan Securities said Ford delivered a "solid set of results given the current climate."

"We expect a positive reaction, and continue to believe Ford's recent rally is not unjustified," he added.

Ford, which took out a credit line of 23 billion dollars before the credit crunch worsened, has managed to avoid the fate of rivals General Motors and Chrysler, which are near bankruptcy even with US government aid.

"The financial picture at Ford shows how brilliant the move of new CEO Alan Mulally was when he essentially mortgaged the company," said Douglas McIntyre at 24/7 Wall Street. "He probably saved the company."

Only the South American operations were profitable, earning 63 million dollars, down from 257 million last year.





Clary

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