Ford posts best 1Q profit in 13 years
New arrivals such as the Ford Explorer and Fiesta small car are selling well. Company profits are growing around the world. And Ford is charging more for its cars, helping offset higher commodity costs.
Ford Motor Co. on Tuesday said its profit jumped 22 percent to $2.6 billion profit, its best first-quarter performance since 1998. It was the company's eighth straight quarterly profit in its long climb back from near-bankruptcy five years ago.
Ford's quarterly revenues rose 18 percent to $33.1 billion, far higher than the $30.5 billion analysts were projecting.
The company saw especially strong growth in Asia, where revenues jumped 31 percent to $2.1 billion. Ford has seen little impact from the March 11 earthquake and tsunami in Japan.
"Our team delivered a great quarter, with solid growth and improvements in all regions," Ford President and CEO Alan Mulally said.
Ford's stock price rose 40 cents, or 2.6 percent, to $15.94 in midday trading, the high end of its range of $9.75 to $18.97 over the past year.
The redesigned Explorer SUV, which gets more miles per gallon than the previous version, saw U.S. sales more than double. Sales of the Fusion midsize sedan rose 27 percent.
Rising gas prices are pushing buyers to smaller, more fuel-efficient vehicles.
While that could cut into Ford's profits as the year goes on, the company so far has been able to command higher prices for its cars, partly because buyers are adding more expensive options such as the Sync entertainment system.
The average price of a Ford vehicle increased $260 to $30,463 in the first quarter, according to Edmunds.com.
Ford still has some trouble spots on the horizon. Higher prices for commodities such as steel cost the company $300 million in the first quarter. Those costs could increase by as much as $2 billion by the end of this year.
Sales of the Lincoln luxury brand are slipping, even though company has promised a revamp over the next two years. Lincoln's U.S. sales fell 11 percent in the first quarter. By comparison, sales at rival Cadillac rose 38 percent.
Ford also lost some market share in the U.S., Europe and South America in the first quarter, partly because it didn't match incentive spending by rivals such as General Motors Co. Ford also has two fewer brands than it had last year, after selling Volvo and shutting down Mercury.
Ford Chief Financial Officer Lewis Booth said the company is trying to be very disciplined and won't produce more than it can sell, a cycle that leads to big discounts.
Booth said Ford also continued to make progress paying off its debt. The company, which took out a $23 billion loan in 2006 to revamp its operations, ended the quarter with $16.6 billion in debt. That debt level was down $2.5 billion from the beginning of the year.
Ford now has $4.7 billion more cash than debt, an improvement of $3.3 billion from the start of this year.
Still, investors will be keeping an eye out for any troubles. Even though Ford earned $6.6 billion in 2010, its largest profit since 1999, investors still hammered the stock after the company fell short of expectations due to a big fourth-quarter debt payment.
The disaster in Japan, which has hurt production at Japanese automakers, has had little impact on Ford so far. Booth said the company has lost production of 12,000 to 14,000 vehicles at its Asian operations, but doesn't expect the losses to affect the company's bottom line. Three Asian assembly plants are closed this week because of parts shortages, Booth said.
Separately, AutoNation Inc., the nation's largest auto dealership chain, lowered its forecast for U.S. industry-wide sales this year to around 12.5 million new vehicles from 12.8 million because of factory disruptions caused by the earthquake.
The company said Japan-based carmakers would not be able to meet demand because of production cuts. But it predicted strong demand for new cars would continue.
"This is a supply disruption, not a demand disruption," CEO Mike Jackson said. "There simply is not going to be enough product to support demand for the year."