Ford earns $1.7b in 3Q, pays down health care debt
Baku, October 26 (AZERTAC). Ford Motor Co.`s third-quarter net income rose 68 percent as it grabbed a bigger share of the U.S. auto market and buyers paid more for its highly-rated cars and trucks.
It was Ford`s sixth straight quarterly profit and the company`s best third-quarter performance since at least 1990.
Ford CEO Alan Mulally said popular new cars, such as the Ford Fiesta subcompact and Ford Edge wagon, and aggressive cost-cutting helped the company make money despite lower global sales.
The automaker said it expects to end the year with as much cash as it has debt, a year earlier than it had previously forecast.
Ford, which four years ago mortgaged its factories, blue oval logo and other assets to fund a huge restructuring, said it paid off $2 billion in debt in the third quarter and expects to pay off an additional $3.6 billion for retiree health care on Friday. Ford`s debt will stand at $22.8 billion after those two actions. It has $20.3 billion in cash.
When Ford pays its debt to the United Auto Workers health care trust, it will no longer owe the trust any money. The UAW agreed to the trust in 2007, and it began paying health care benefits for 195,000 retirees and spouses in January. The automaker was paying a 9 percent annual interest rate on its obligation to the trust.
Ford also said it is launching an offer to convert $3.5 billion in debt to common stock. The offer closes Nov. 23.
Ford`s earnings of $1.7 billion, or 43 cents per share, beat Wall Street estimates.
Without one-time items, which included a $102 million charge related to Ford`s sale of Volvo, Ford would have earned 48 cents per share. Analysts polled by Thomson Reuters had forecast earnings of 38 cents per share. Those estimates typically exclude one-time items.
In the same quarter a year earlier, Ford earned $1 billion, or 26 cents per share.
Ford`s quarterly revenues fell $1 billion, or 3 percent, to $29 billion for the quarter. But Ford said if Volvo`s 2009 revenues were excluded, revenues rose $1.7 billion.
For the first three quarters of the year, Ford made $6.4 billion. The company also said it expects all of its regions to be profitable in the fourth quarter and for all of 2011.
In the third quarter, Ford`s European operations posted a $196 million loss, compared with a $131 million profit a year ago, but all other regions made money.
Ford Motor Credit Co., the company`s auto loan arm, made $497 million for the third quarter and contributed $1 billion to the parent company.
The Dearborn, Mich., automaker offered to convert $3.5 billion in bonds that pay 4.25 percent interest to shares of common stock. The notes, held mainly by hedge funds and other institutional investors, were due in 2016 and 2036.
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