Marking its best performance in a decade, Ford Motor Company reported a $6.6 billion profit in 2010 in the face of a slowdown in the last three months of the year.
The Blue Oval managed to grow U.S. vehicle sales by 19.5 percent in 2010, marking the second consecutive year of profitability after three years of losses. Sales of the highly-profitable F-Series pick-up trucks grew 27.7 percent. The results are music to the ears of investors, auto enthusiasts, and Ford fans alike — since Ford’s turnaround is one of the most successful in automotive history. Just a few short years ago, Ford was the last of the Detroit Three in its turnaround, appearing the most vulnerable compared to cross-town rivals GM and Chrysler.
The successful performance of yesteryear is responsible for an average bonus of $5,000 for Ford’s 40,600 hourly workers, marking the biggest bonus since 2001.
“Our 2010 results exceeded our expectations, accelerating our transition from fixing the business fundamentals to delivering profitable growth for all,” said Ford President and CEO Alan Mulally. “We are investing in an unprecedented amount of products, technology and growth in all regions of the world.”
Ford’s full-year pre-tax operating profit in 2010 was $8.3 billion — the best since 2000. However, the automaker’s recovery in the fourth-quarter slowed, with figures falling short of most Wall Street estimates. Ford blames the depressed Q4 results on weaker-than-expected European sales and high promotional costs for new models. Pre-tax operating profit for the fourth quarter was $741 million versus $914 million a year ago. The disappointing Q4 results pushed Ford’s shares down 13 percent (or $2.52) in Friday trading to $16.27 at market close.
For 2010, Ford cut debt by $14.5 billion to $19.1 billion – a move that will save The Blue Oval $1 billion a year in interest costs. However, the nearly $20 billion of debt are still a cause of concern for analysts. According to Ford Executive Vice President and Chief Financial Officer Lewis Booth, reducing debt would remain a “key focus” in 2011.
Ford is the only one of the Big Three that didn’t take bailout funds from the government during the carpocalypse of 2009, deciding instead to heavily leverage its assets. The automaker now owes more than rivals GM and Chrysler, who wiped their debts by filing for bankruptcy protection. But the bankruptcies — arguably — came at the expense of depressed reputation and reduced trust.
“They [Ford] have come a long way in the last three or four years and have set themselves up for the near term. They are making cars that both the media and the public like,” said Jessica Caldwell, an Edmunds.com analyst. Acknowledging that debt is a concern, “It is money they can’t spend on research and development,” added Caldwell. “But not taking bankruptcy bought them a lot of goodwill. GM is still trying to shake off the ‘Government Motors’ moniker.”
Source: Ford, The Guardian