Ford Expected to Ride Momentum to Q1 Profit

April 26, 2010
Wall Street analysts surveyed by Thomson Reuters expect a second-quarter profit of $1.18 billion, or 31 cents per share, on $30.5 billion in revenue.

Ford Motor Co., the second-largest U.S.-based automaker, is scheduled to report first-quarter results on April 27.

WHAT TO WATCH FOR: Ford is viewed by many Americans as a hero for not taking government aid and avoiding bankruptcy, so it should report strong revenue from its North American operations based on a huge U.S. sales increase for the quarter.

Ford rode high quality rankings and goodwill from shunning government aid to a 37% U.S. sales increase for the quarter compared with a dismal first quarter of 2009. In addition, the automaker's U.S. market share rose nearly three percentage points to 17.4%. In February, Ford outsold General Motors Co. for the first time since August 1998, when GM was in the midst of a strike.

Ford also benefited from Toyota Motor Corp.'s safety troubles, which included several recalls and the company stopping sales and production for about a week during the quarter while repairs were made to gas pedal mechanisms that can stick.

The Dearborn, Mich., automaker's international revenue should rise in the quarter as well due to strong sales. In fast-growing China, Ford sales were up 84% for the quarter.

The company has promised to work on its balance sheet, which has a huge amount of debt, perhaps with another stock offering. The automaker finished last year with $34.3 billion in debt, putting it at a disadvantage to Chrysler Group LLC and GM, which were able to wipe out most of their debt on trips through bankruptcy court. It has pledged to pay $3 billion on its revolving line of credit in the second quarter.

WHY IT MATTERS: The recovery of the auto industry is a big economic indicator, and Ford is likely to be the leader in revenue and sales gains among U.S.-based automakers. The company also is likely to raise production in anticipation of greater demand during the spring and summer buying seasons as the economy continues its slow recovery. That could mean additional manufacturing jobs.

Although it's a much smaller company than it was even five years ago, Ford still employs about 74,000 people in North America and 198,000 worldwide.

Much of Ford's fortunes hinge on the U.S. auto market continuing its recovery, and Wall Street will continue to watch auto sales for indications of that. Most analysts are predicting a slow recovery this year. Toyota raised incentives to combat the impact of its safety recalls, and Ford matched the incentives on some vehicles. If the incentive fight continues, it will cut into Ford's profits.

WHAT'S EXPECTED: Wall Street analysts surveyed by Thomson Reuters expect a second-quarter profit of $1.18 billion, or 31 cents per share, on $30.5 billion in revenue.

LAST YEAR'S QUARTER: In the first quarter of 2009, Ford lost a whopping $1.4 billion, or 60 cents per share, on $21.4 billion in revenue at the height of the recession.

Copyright 2010 The Associated Press.

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