DEARBORN, Mich. — Helped by a lightened debt load, Ford Motor Co. posted a surprise second-quarter profit of $2.3 billion Thursday, following the worst loss in company history a year earlier.
The net profit ends a string of four straight quarterly losses for the nation’s second-largest automaker, which has gained U.S. market share at the expense of crosstown rivals Chrysler Group LLC and General Motors Co., both of which spent time under bankruptcy court supervision. Ford last went into the black in the first quarter of 2008, with net profit of $70 million.
Aaron Bragman, an analyst for the consulting firm IHS Global Insight, attributed Ford’s progress to restructuring and product improvements made under CEO Alan Mulally, who was hired away from aircraft giant Boeing Co. in 2006. Mulally also made the decision to borrow the money before the credit markets froze.
Despite the progress, though, Ford still faces challenges of dealing with its debt and trying to erase cost advantages that Chrysler and GM have gained because of their stays in bankruptcy. GM and Chrysler can finance cars and trucks with low-cost government money, something that Ford also does not have access to, Bragman said.
The company is shifting its model lineup toward smaller cars, which could end up being a liability, Bragman said.
“If gas prices do not begin to climb, they’re also going to face the challenge of having a lot of small cars to sell and there may not be the demand for them,” he said.
Ford reported second-quarter net income of 69 cents a share, compared with a loss of $8.7 billion, or $3.89 a share, for the same quarter a year ago. However, excluding its debt reduction and other items, Dearborn, Mich.-based Ford would have reported a quarterly loss, though smaller than Wall Street expected.
The company made $1.8 billion in structural cost cuts for the quarter, including 1,000 blue-collar job cuts through buyout and early retirement offers. Ford now has 47,300 factory workers, which it says is about the correct level. The automaker also reached a new agreement with the United Auto Workers union to change how it will pay the $13.1 billion it owes to a health care trust. That trust will take over retiree medical costs starting in January.
But excluding special items, including the debt reduction, Ford would have lost $424 million, or 21 cents a share. Those results still beat analysts’ expectations of a per share loss of 50 cents on revenue of $24.7 billion. Revenue totaled $27.2 billion, 40 percent less than a year earlier as the worldwide auto sales slump continued.
To continue its market share and balance sheet improvements Ford needs the economy to get better so people are comfortable buying new vehicles. Mulally said Ford expects the economy to begin a turnaround in the fourth quarter and into next year.
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