Anyone looking for proof that the American car industry is back on track need look no further than the $2.1 billion Ford Motor (F) raked in during the first quarter. It was the best quarter the automaker has seen in six years, and based on the results, the Dearborn, Mich.-based company "now expects to deliver solid profits this year," it said Tuesday.
On a per-share basis the automaker reported it earned 50 cents a share on revenues of $28.1 billion, well ahead of the 31 cents a share Wall Street expected.
A year ago, things were much different. Ford reported it lost $1.4 billion, or 60 cents a share, as the country was mired in a painful recession.
The $2.1 billion profit was about double what analysts anticipated. The upbeat first-quarter results were "absolutely a manifestation of our products," CEO Alan Mulally told investors and reporters during a conference call held shortly after Ford released its earnings statement early Tuesday.
Sales in the company's core U.S. market were up 37%, Mulally said, while Ford share of the domestic auto market rose 2.7 percentage points to 16.6%. "That is absolutely on the strength of this product lineup," he said, adding that all vehicles -- small, medium and large -- showed double-digit gains in sales.
Full Speed Ahead
The positive earnings report is an important milestone for the U.S. auto industry, said Art Wheaton, auto analyst at Cornell University. "The (results) demonstrate Ford has the product today to compete with anyone." But, Wheaton said, "It must continue to bring new and innovative products to succeed in the long term."
Ford's plans call for just that. The much anticipated 2011 Ford Fiesta subcompact arrives this summer, while a replacement for the venerable Ford Explorer sports-utility vehicle debuts a few months later, bringing with it 1,200 jobs at the company's Chicago-area plant.
In anticipation that the economy will continue to gain steam, Ford plans to boost production during the current quarter 9% to 625,000 vehicles. While the increase could lead to additional hiring, Chief Financial Officer Lewis Booth said Tuesday it was too soon to say if it would translate into more jobs.
During the conference call, Mulally said the company's turnaround was the manifestation of several key decisions made a about four years ago. Those included a renewed focus on the Ford brand, which resulted in the company selling off its European luxury nameplates. The last of those, Volvo, was sold to China's Zhejiang Geely Holding Co. for $1.8 billion last month. That deal is expected to close in the third quarter, the company said.
The restructuring also called for offering a complete family of vehicles that include small and large passenger cars, trucks and utility vehicles, and to build them to levels of quality, safety, design and fuel efficiency to compete with manufacturers worldwide.
Mulally also credited the strong quarterly results on Ford's decision not to seek government bailout money or declare bankruptcy, unlike its crosstown rivals, General Motors and Chrysler. In not doing so, "We respected the shareholders, we respected the bondholders, we respected everybody that had invested in Ford," Mulally said. "I think that resonates very well with our consumers."