Wednesday, April 28, 2010
Ford's $2.1 billion profit may be year's best as costs begin to rise
Ford Motor Co.'s first-quarter profit of $2.1 billion may be as good as it gets this year as the automaker faces rising costs to introduce new models.
Today's earnings report came with a plan to boost second-quarter production and spurred CEO Alan Mulally to forecast a “solid” 2010 profit, a year ahead of his previous prediction. Future quarters may not be as strong, CFO Lewis Booth said today.
“It would be unwise to think of $2 billion as a running rate,” Booth told reporters. “We've got a lot of new product launches, so you'll see some launch expense and we do expect some headwinds from commodities” prices.
The executives cited challenges such as a “fragile” economy after posting a fourth straight quarter of net income, the longest streak since 2005. Booth said the Ford Motor Credit unit was unlikely to “keep up the pace” for the rest of the year.
“The first quarter could turn out to be their best,” said Joe Phillippi, president of AutoTrends Consulting in Short Hills, New Jersey. “The landscape might become more competitive as Toyota fights its way back and GM launches a lot of new products.”
Ford said second-quarter production in North America will be 625,000 vehicles, a 5 percent increase from the plan announced March 2. Output will rise 39 percent compared with a year earlier.
Ford benefited from a recovering auto market and higher prices that added $1 billion to pretax operating earnings. Excluding some gains and costs, earnings were 46 cents a share, topping the 31-cent average of 12 estimates compiled by Bloomberg.
Market share
A 37 percent surge in U.S. sales in the first quarter more than doubled the industrywide increase, helping Ford add domestic market share at the fastest pace in 33 years after becoming the only major U.S. automaker to avoid bankruptcy in 2009.
Profit was buoyed by Ford Credit's $828 million of pretax operating income, after a $36 million year-earlier loss. Ford Credit, which lends to dealers and buyers, will earn about $2 billion on an operating basis in 2010, Ford said. The unit will pay Ford a dividend of $2 billion this year, up from a previous forecast of $1.5 billion, Booth said.
Himanshu Patel, a JPMorgan Chase & Co. analyst in New York, said in a note that the unit's first-quarter gains were driven by rising resale prices and are “unsustainable.” He advises holding Ford shares.
Ford shares slid 6.3 percent, to $13.55, at 4:02 p.m. in New York Stock Exchange composite trading. The stock tumbled as much as 9.1 percent earlier in the day, the most since May 12, after almost tripling in the 12 months through yesterday.
Regional results
In North America, Ford had a pretax operating profit of $1.2 billion, following a $665 million loss in the first three months of 2009. Revenue climbed 41 percent to $14.1 billion.
Ford also posted better results in all regions outside North America.
• Ford South America reported operating profit of $203 million versus $63 million a year ago. Higher costs prevented even higher profits, the company said. First quarter revenue was $2 billion, up from $1.4 billion.
• Ford Europe posted a profit versus a loss last year. The unit enjoyed higher sales, lower costs and higher parts profit. First-quarter operating profits were $107 million, compared with a loss of $585 million a year ago. Revenue jumped to $7.7 billion versus $5.8 billion.
• Ford Asia Pacific Africa also erased a loss last year. The region posted operating profit of $23 million, compared with a loss of $97 million a year ago. Higher sales in China boosted results.
Factory conversions
Some factories will close temporarily in the second half while being converted to build a new version of the Focus compact car, Booth said. Ford's price gains will “deteriorate” with the debut of the Focus and the Fiesta small cars this year because those models are less expensive, he said.
The Fusion sedan, F-150 pickup and Fusion drove first-quarter U.S. sales increases, Booth said.
“The most important thing Ford has done is invest heavily in new product during this down cycle,” said Erich Merkle, president of consultant Autoconomy LLC in Grand Rapids, Mich. “As we're coming out, they've got all this new product coming out in just about every category.”
First-quarter revenue rose 15 percent to $28.1 billion. That compared with the $28 billion average estimate among seven analysts. Net income was 50 cents a share, exceeding the average estimate of 29 cents from two analysts, and compared with a net loss of $1.43 billion, or 60 cents, a year earlier.
2010 outlook
Revising Mulally's previous forecast of being “solidly profitable” in 2011, Ford said today it “now expects to deliver solid profits this year, with positive automotive operating-related cash flow.” Booth said 2010 earnings will exceed the first-quarter total, without giving a figure.
“Given where we were even three or four months ago, this says to you that we're really encouraged by the start we had” to the year, Booth told analysts.
Ford reported $25.3 billion in automotive cash on March 31, up from $24.9 billion at the end of 2009, which the automaker restated from $25.5 billion because of an accounting change.
Cash consumption was $100 million during 2010's first three months, after the company used $3.7 billion a year earlier. Booth said Ford will have positive cash flow for all of 2010.
Borrowing $23 billion in late 2006 gave Ford a cash cushion to withstand losses and develop new models such as the Fiesta. The trade-off was a debt load that Mulally has said puts Ford at a competitive disadvantage with General Motors Co. and Chrysler Group LLC, which had their obligations cut in bankruptcy.
Automotive debt was $34.3 billion, up from $33.6 billion at the end of 2009, which was adjusted from $34.3 billion due to an accounting change, Ford said. That doesn't include a $3 billion payment Ford made on its revolving line of credit on April 6.
Redesigned models such as the Taurus sedan helped boost U.S. market share through March to 17.4 percent from 14.7 percent a year earlier, the biggest jump since 1977, Ford has said. Ford has said it is attracting buyers from Toyota Motor Corp. after global recalls of more than 8 million vehicles.
Mulally, 64, also completed his push to unload Ford's European luxury brands by reaching an agreement in March to sell Volvo to China's Zhejiang Geely Holding Co. That transaction should close in the third quarter, Ford said today.
Today's earnings report came with a plan to boost second-quarter production and spurred CEO Alan Mulally to forecast a “solid” 2010 profit, a year ahead of his previous prediction. Future quarters may not be as strong, CFO Lewis Booth said today.
“It would be unwise to think of $2 billion as a running rate,” Booth told reporters. “We've got a lot of new product launches, so you'll see some launch expense and we do expect some headwinds from commodities” prices.
The executives cited challenges such as a “fragile” economy after posting a fourth straight quarter of net income, the longest streak since 2005. Booth said the Ford Motor Credit unit was unlikely to “keep up the pace” for the rest of the year.
“The first quarter could turn out to be their best,” said Joe Phillippi, president of AutoTrends Consulting in Short Hills, New Jersey. “The landscape might become more competitive as Toyota fights its way back and GM launches a lot of new products.”
Ford said second-quarter production in North America will be 625,000 vehicles, a 5 percent increase from the plan announced March 2. Output will rise 39 percent compared with a year earlier.
Ford benefited from a recovering auto market and higher prices that added $1 billion to pretax operating earnings. Excluding some gains and costs, earnings were 46 cents a share, topping the 31-cent average of 12 estimates compiled by Bloomberg.
Market share
A 37 percent surge in U.S. sales in the first quarter more than doubled the industrywide increase, helping Ford add domestic market share at the fastest pace in 33 years after becoming the only major U.S. automaker to avoid bankruptcy in 2009.
Profit was buoyed by Ford Credit's $828 million of pretax operating income, after a $36 million year-earlier loss. Ford Credit, which lends to dealers and buyers, will earn about $2 billion on an operating basis in 2010, Ford said. The unit will pay Ford a dividend of $2 billion this year, up from a previous forecast of $1.5 billion, Booth said.
Himanshu Patel, a JPMorgan Chase & Co. analyst in New York, said in a note that the unit's first-quarter gains were driven by rising resale prices and are “unsustainable.” He advises holding Ford shares.
Ford shares slid 6.3 percent, to $13.55, at 4:02 p.m. in New York Stock Exchange composite trading. The stock tumbled as much as 9.1 percent earlier in the day, the most since May 12, after almost tripling in the 12 months through yesterday.
Regional results
In North America, Ford had a pretax operating profit of $1.2 billion, following a $665 million loss in the first three months of 2009. Revenue climbed 41 percent to $14.1 billion.
Ford also posted better results in all regions outside North America.
• Ford South America reported operating profit of $203 million versus $63 million a year ago. Higher costs prevented even higher profits, the company said. First quarter revenue was $2 billion, up from $1.4 billion.
• Ford Europe posted a profit versus a loss last year. The unit enjoyed higher sales, lower costs and higher parts profit. First-quarter operating profits were $107 million, compared with a loss of $585 million a year ago. Revenue jumped to $7.7 billion versus $5.8 billion.
• Ford Asia Pacific Africa also erased a loss last year. The region posted operating profit of $23 million, compared with a loss of $97 million a year ago. Higher sales in China boosted results.
Factory conversions
Some factories will close temporarily in the second half while being converted to build a new version of the Focus compact car, Booth said. Ford's price gains will “deteriorate” with the debut of the Focus and the Fiesta small cars this year because those models are less expensive, he said.
The Fusion sedan, F-150 pickup and Fusion drove first-quarter U.S. sales increases, Booth said.
“The most important thing Ford has done is invest heavily in new product during this down cycle,” said Erich Merkle, president of consultant Autoconomy LLC in Grand Rapids, Mich. “As we're coming out, they've got all this new product coming out in just about every category.”
First-quarter revenue rose 15 percent to $28.1 billion. That compared with the $28 billion average estimate among seven analysts. Net income was 50 cents a share, exceeding the average estimate of 29 cents from two analysts, and compared with a net loss of $1.43 billion, or 60 cents, a year earlier.
2010 outlook
Revising Mulally's previous forecast of being “solidly profitable” in 2011, Ford said today it “now expects to deliver solid profits this year, with positive automotive operating-related cash flow.” Booth said 2010 earnings will exceed the first-quarter total, without giving a figure.
“Given where we were even three or four months ago, this says to you that we're really encouraged by the start we had” to the year, Booth told analysts.
Ford reported $25.3 billion in automotive cash on March 31, up from $24.9 billion at the end of 2009, which the automaker restated from $25.5 billion because of an accounting change.
Cash consumption was $100 million during 2010's first three months, after the company used $3.7 billion a year earlier. Booth said Ford will have positive cash flow for all of 2010.
Borrowing $23 billion in late 2006 gave Ford a cash cushion to withstand losses and develop new models such as the Fiesta. The trade-off was a debt load that Mulally has said puts Ford at a competitive disadvantage with General Motors Co. and Chrysler Group LLC, which had their obligations cut in bankruptcy.
Automotive debt was $34.3 billion, up from $33.6 billion at the end of 2009, which was adjusted from $34.3 billion due to an accounting change, Ford said. That doesn't include a $3 billion payment Ford made on its revolving line of credit on April 6.
Redesigned models such as the Taurus sedan helped boost U.S. market share through March to 17.4 percent from 14.7 percent a year earlier, the biggest jump since 1977, Ford has said. Ford has said it is attracting buyers from Toyota Motor Corp. after global recalls of more than 8 million vehicles.
Mulally, 64, also completed his push to unload Ford's European luxury brands by reaching an agreement in March to sell Volvo to China's Zhejiang Geely Holding Co. That transaction should close in the third quarter, Ford said today.
Monday, April 26, 2010
Friday, April 23, 2010
Chrysler and U.S. market to play key role in Alfa relaunch
Fiat S.p.A. CEO Sergio Marchionne made a strong commitment to the money-losing sporty brand, which will be 100 years old in June, during a presentation of Fiat's five-year strategy Wednesday.
Marchionne announced the launch of seven new Alfa models between 2010 and 2014 and said Fiat is determined to transform the brand into a "full-line premium carmaker."
Marchionne also said North America will account for 85,000 unit sales in 2014 out of 500,000 that Alfa aims to sell in that year.
The Chrysler-built vehicles for Alfa will be:
• A compact SUV based on the Compact architecture that underpins the Giulietta hatchback in Europe. Production will begin in 2012
• A large SUV, similar in size to the next Jeep Liberty, which is sold as the Cherokee in Europe. Production will start in 2014.
The crossover models will be built in two of the three U.S. plants that Chrysler Group plans to retool for new Chrysler, Dodge and Jeep models based on Fiat-Chrysler's Compact Wide architecture.
Alfa will also sell a mid-sized sedan and station wagon when in the U.S. starting in late 2012. These two vehicles will have the name Giulia and in Europe will replace the 159 range. They will be built in Italy.
Alfa will also sell in the U.S. a five-door version of its MiTo minicar, which is currently sold in Europe as a three-door. The five-door MiTo will be sold in Europe and North America starting in 2013.
Alfa will launch the Giulietta in North America after the car gets a face-lift in 2014. The Giulietta launches in May in Europe.
Alfa will continue to build the Mito and Giulietta in Italy.
Chrysler to build Alfa spider
Marchionne also said Chrysler will provide the platform for a new Alfa spider model, planned for 2013, but said the production location has not been decided.
Fiat's plan for Alfa to sell 500,000 cars in 2014 is five times more than Alfa sold last year.
Starved of fresh product as Fiat delayed key new models, Alfa sales have declined steeply as its lineup became older. This year's volume expected to be 120,000 units, compared with a peak of 207,000 in 2001. Alfa has lost between 200 million and 400 million euros ($288 million to $566 million) a year in the past 10 years, according to company sources.
Alfa quit the North American market in 1995 after the quality of the brand's cars was condemned in studies and its sales plummeted.
Thursday, April 22, 2010
MSC10: My Special Car 2010
Rimini, dal 26 al 28 marzo 2010. La maggiore esposizione tuning italiana.
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