Ford made an accounting adjustment in the fourth quarter worth $12.4 billion that increased its 2011 earnings to $20.2 billion, the second-highest total ever for the carmaker.
The one-time gain, which eliminates most of a tax allowance created when the company was bleeding billions of dollars in 2006, indicates that Ford expects to continue earning substantial profits in the coming years, according to Ford’s chief financial officer, Lewis W. K. Booth.
By region, the company earned an operating profit of $6.2 billion for the year in North America but lost a total of $119 million in its Europe and Asia-Pacific regions. Its fourth-quarter operating profit fell slightly.
“We delivered strong results for the full year as we continued to serve our customers around the world with best-in-class vehicles and make progress toward our mid-decade goals,” Ford’s chief executive, Alan R. Mulally, said in a statement. “Despite the continued uncertainty in the external environment, the strength of our North American and Ford Credit operations allow us to continue to invest for future growth.”
The net profit was equal to $4.94 a share, up from $1.56 a share a year earlier, when Ford earned $6.6 billion.
Excluding the accounting change and other special items, Ford earned an operating profit of $8.8 billion for the year, or $1.51 a share, 6 percent more than its 2010 operating profit of $8.3 billion, or $1.91 a share.
Revenue increased 13 percent to $136.3 billion, but profit margins declined to 5.4 percent, from 6.1 percent in 2010.
The North American results mean 41,600 hourly workers in the United States will receive $6,200 in profit-sharing bonuses for 2011. Those workers already received a $3,750 advance on that amount after signing a new four-year labor agreement last fall and will receive the remaining $2,450 in March.
In the fourth quarter, Ford reported an operating profit of $1.1 billion, or 20 cents a share, down from $1.3 billion, or 30 cents a share, a year ago. Analysts were expecting earnings of 25 cents a share. Including the accounting gain, Ford had net income of $13.6 billion, the most ever for a fourth quarter.
Fourth-quarter revenue rose 6 percent to $34.6 billion.
Ford ended 2011 with $13.1 billion in automotive debt, $400 million more than at the end of the third quarter but $6 billion less than it had a year earlier.
It had $22.9 billion in automotive cash, up $5.6 billion for the year.
Mr. Booth said the challenging economy in Europe and flooding in Thailand hurt fourth-quarter earnings. Commodity costs also ended up being higher than expected, he said.
“The quarter was really driven by North America,” he told reporters at Ford’s headquarters on Friday. “We saw the external environment deteriorate, and that really affected most regions other than North America.”
The accounting gain means that, on paper, Ford has recovered nearly all of the $30.1 billion it lost from 2006 through 2008. In the three years since, the company’s profit totaled $29.5 billion.
Ford created the tax valuation allowance in 2006, when Mr. Mulally joined the company as its performance was in a downward spiral and it mortgaged most assets to raise money. The losses meant Ford could no longer keep many deferred tax assets on its books, but after posting 11 consecutive profitable quarters it was able to release nearly all of that allowance.
With the automotive market in the United States improving, Ford said it expected operating profit to increase in 2012 and for profit margins to be equal to or better than 2011. The company said it planned to contribute $3.5 billion to its underfunded pension plans, including $2 billion in the United States.
Ford sold 11 percent more cars and trucks at American dealerships in 2011, with big gains for its redesigned Explorer sport utility vehicle and year-old Fiesta subcompact car. This year, it is bringing out revamped versions of the Fusion midsize sedan and Escape crossover vehicle, along with several plug-in vehicles and hybrids.
Mr. Booth said Ford would be able to improve its performance in the years ahead not only by increasing sales but also by operating more efficiently, which is a central focus of its turnaround plan, known as One Ford.
“We’re really only at the beginning of getting the benefits of One Ford,” Mr. Booth said.
Article source: http://feeds.nytimes.com/click.phdo?i=4dfa095bed8d9787fdff85fb59ce04cc
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