Ford reports $2.7-billion profit in '09 -- first since '05

Detroit Free Press

January 28, 2010

Jan. 28--Ford said today it earned a profit of $2.7 billion, a stunning improvement over its historic, $14.7-billion loss in 2008, especially for a year that saw industry sales drop to their lowest level since 1982.

It also marks the company's first full-year profit since 2005.

Ford, which has been criticized by the UAW for reinstating merit pay and other benefits for its salaried workforce, also said Thursday that it will pay profit sharing to 43,000 eligible U.S. hourly employees.

Ford said it expectsUthe average hourlyIworkers is expected to receiveA$450 on March 10. TheUlast Ford provided profitAsharing to its hourly workersUwas in 2004 when theyAreceived an average of $600.I

Ford'sUyear-end results were helpedEby a $4.7 billion one-timeUgain the company bookedUin the second quarter afterUit recapitalized a portionIof its debt, and benefitedAfrom a total of $2.6Ibillion in other specialUitems for the year. I

But even withoutIspecial one-time items, FordUreported a pre-tax operatingEincome of $454 millionUcompared with a loss ofU$6.8 billion in 2008. E

"We are delighted,"UFord CFO Lewis BoothEtold reporters this morning.A"We are seeing the benefitEof our production rampingIback up." U

Ford's results easilyEbeat Wall Street forecasts,Ewho expected Ford to reportEa loss of 31 cents perUshare, according to 13 estimatesEtracked by ThomsonUOne Analytics. A

For the October to DecemberEperiod, Ford reportedInet income of $868 million,Ior 25 cents per shareEcompared with a loss of $5.9Abillion, or 2.51 per share,Afor the same periodAin 2008.

OnUa pre-tax operating basis,IFord earned $1.7 billionUor 43 cents per comparedEwith a loss of $3.3 billion,Aor 1.40 per share lastEyear.

Ford'sUperformance also offersUmore evidence that its a reorganizationUplan that beganUin 2005, and was acceleratedEby Ford President andICEO Alan Mulally, is gainingUmomentum. E

Ford, the only U.S. automakerAthat didn't fileIfor bankruptcy in 2009, gainedAfavor from the publicUlast year for being ableEto stand on its own. E

Ford has closedU14 assembly and parts plantsEin North America and slashedAits hourly workforceIin half to just over 50,000Isince 2005. A

"Clearly, their marketUshare gains in 2009, theEsurge of the goodwill...andEtheir ability to avoid bankruptcyIand government aidAare all flowing reallyEnicely into their operatingEresults," Mark Oline, managingUdirector for FitchIRatings said in an interviewUlast Friday. U

"And probably the moreAsurprising aspect is theirEability to manage productionAand inventories andApricing. All of that obviouslyEstarts on the pricingIside with good competitiveAproducts," Oline said. A

Ford also providedAguidance for 2010,Eand said it expects to earnEa profit for the year. Previously,UFord had only saidIit would be "solidly profitable,"Eby 2010. E

Booth now says FordUexpects the company andUits North American divisionUwill earn a profit inA2010 and will report a positiveAcash flow. However,ABooth said it will still takeUuntil 2011 before theAcompany is "solidly profitable."I

DespiteEthe financial improvements,EFord continues to faceUdebt that increased byI$6.4 billion during the fourthAquarter to $34.3 billionIas the company transferredAfuture retiree liabilitiesEto a UAW-managed trustUfund.

"WeUare not kidding ourselves...weIstill have a huge amountUof debt on our balanceIsheet," Booth said. "WeIare still working on that."I

ContactEBRENT SNAVELY: 313-222-6512Eor bsnavely@freepress.com.U