On April 26, the Ford Motor Company (F, Financial) reported first quarter net income of $2.6 billion, or 61 cents per share, a $466 million increase from first quarter 2010. The results confirm management’s continued success in turning around the company since its 2009 restructuring, when Ford narrowly escaped Chapter 11, and 2010’s best result in 13 years with net income of $6.6 billion (2009: $2.7 billion).
The stock is held by many of the Gurus as a potential recovery stock and, despite recent out performance, still trades on a relatively low PE ratio of 9.3 (as of close April 29).
The company reported solid growth and improvements in all regions, and the automotive division as a whole reported a pre-tax operating profit increase of 80%, or $936 million, to $2.1 billion. The increase was driven by favorable volume and mix and favorable net pricing that more than offset higher material costs, warranty expense and freight and duty costs.
The North American division posted a first quarter pre-tax operating profit of $1.8 billion, a $591 million increase from first quarter 2010 as U.S. sales increased 16% due to strong demand for fuel-efficient products such as Fiesta, Fusion, Edge, Escape, Explorer and F-Series. These were offset partially by higher contribution costs, primarily material costs to support new products.
Europe, currently Ford’s second largest market, reported a pre-tax operating profit of $293 million, compared with a profit of $107 million a year ago.
Ford also made progress in strengthening its balance sheet, and the possible restoration of an investment grade rating, with a net reduction in Automotive debt of $2.5 billion in the first quarter. Automotive gross cash exceeded debt by $4.7 billion, an improvement of $3.3 billion from year end 2010.
Commenting on the industry outlook, Ford said it continues to expect U.S. full year industry volume to be in the range of 13 million to 13.5 million units compared to 11.8 million units in 2010. The company has previously stated that they also expect to see strong growth in emerging markets such as China, India, Brazil and Turkey, which should offer significant sales volume opportunities.
Asia Pacific Africa only contributed $33 million pre-tax operating profit compared with a profit of $23 million a year ago but the region reported a 31% increase in revenues to $2.1 billion. However, the company commented that the earthquake in Japan may affect these operations in the near term due to a shortage of components and announced that it is closing factories in Taiwan for two weeks and plants in South Africa and China for one week each.
Regarding its outlook for the full year, the company commented that, despite lower expected profit at Ford Credit and increasing commodity costs, it expects to deliver continued improvement in pre-tax operating profits.
Disclosure: The author has no long or short positions in Ford Motor Company
The stock is held by many of the Gurus as a potential recovery stock and, despite recent out performance, still trades on a relatively low PE ratio of 9.3 (as of close April 29).
The company reported solid growth and improvements in all regions, and the automotive division as a whole reported a pre-tax operating profit increase of 80%, or $936 million, to $2.1 billion. The increase was driven by favorable volume and mix and favorable net pricing that more than offset higher material costs, warranty expense and freight and duty costs.
The North American division posted a first quarter pre-tax operating profit of $1.8 billion, a $591 million increase from first quarter 2010 as U.S. sales increased 16% due to strong demand for fuel-efficient products such as Fiesta, Fusion, Edge, Escape, Explorer and F-Series. These were offset partially by higher contribution costs, primarily material costs to support new products.
Europe, currently Ford’s second largest market, reported a pre-tax operating profit of $293 million, compared with a profit of $107 million a year ago.
Ford also made progress in strengthening its balance sheet, and the possible restoration of an investment grade rating, with a net reduction in Automotive debt of $2.5 billion in the first quarter. Automotive gross cash exceeded debt by $4.7 billion, an improvement of $3.3 billion from year end 2010.
Commenting on the industry outlook, Ford said it continues to expect U.S. full year industry volume to be in the range of 13 million to 13.5 million units compared to 11.8 million units in 2010. The company has previously stated that they also expect to see strong growth in emerging markets such as China, India, Brazil and Turkey, which should offer significant sales volume opportunities.
Asia Pacific Africa only contributed $33 million pre-tax operating profit compared with a profit of $23 million a year ago but the region reported a 31% increase in revenues to $2.1 billion. However, the company commented that the earthquake in Japan may affect these operations in the near term due to a shortage of components and announced that it is closing factories in Taiwan for two weeks and plants in South Africa and China for one week each.
Regarding its outlook for the full year, the company commented that, despite lower expected profit at Ford Credit and increasing commodity costs, it expects to deliver continued improvement in pre-tax operating profits.
Disclosure: The author has no long or short positions in Ford Motor Company
