December 8, 2023

Ford Posts 10th Straight Quarterly Profit

It was the tenth consecutive profitable quarter for Ford, which last week secured a new labor contract with the United Automobile Workers union and said it was close to restoring a dividend to shareholders.

Nearly all of the profit — $1.6 billion, the same as a year ago — came from North America, while losses in Europe increased 56 percent, to $306 million.

“We delivered solid results for the third quarter despite an uncertain business environment by continuing to serve our customers around the world with best-in-class vehicles,” Ford’s chief executive, Alan R. Mulally, said in a statement.

The overall profit is equal to 41 cents a share and brings the carmaker’s total earnings for 2011 to $6.6 billion, 4 percent more than the first nine months of 2010. Ford earned $1.69 billion, or 43 cents a share, in the third quarter of 2010. Revenue increased 14 percent to $33.1 billion.

The company earned a third-quarter pretax operating profit of $1.94 billion, or 46 cents a share, $111 million less than a year ago. That figure, which excludes special items related to job cuts, the end of the Mercury brand and dealer-related actions, is slightly above the consensus analyst forecast of 44 cents a share.

Operating profit was reduced by a $350 million non-cash charge related to commodity hedges after prices declined significantly at the end of September, Ford said. It projected that structural and commodity costs for all of 2011 would be $3.8 billion higher than 2010, less than its initial forecast of $4 billion.

Ford said it reduced its automotive debt by $1.3 billion in the quarter to $12.7 billion. It reported positive automotive cash flow of $400 million, but automotive gross cash declined by $1.2 billion to $20.8 billion.

Its chief financial officer, Lewis W. K. Booth, said the company is on track to surpass its 2010 full-year operating profit of $8.3 billion, even though its automotive operating margins would be slightly lower. Its operations have earned $7.7 billion so far in 2011.

“The core of the business is very strong,” Mr. Booth told reporters at Ford’s headquarters. “We’re doing all this while we’re investing for the future.”

Ford workers on Oct. 19 ratified a new four-year deal with the United Automobile Workers that the company says will increase its labor costs by less than 1 percent annually. Most of the company’s 41,000 U.A.W. members will get bonuses of $6,000 and profit-sharing checks of about $3,750 this month.

The new contract prompted Standard Poor’s and Fitch Ratings to upgrade Ford’s credit rating two notches, to BB-plus, which is one level below investment grade. Moody’s is considering a similar upgrade.

With the labor issue settled, analysts now say they expect Ford to resume paying a dividend to shareholders as soon as 2012. The company suspended its quarterly dividend in 2006.

Mr. Booth said Ford would restore its dividend “as soon as we think our balance sheet will stand it,” but he declined to give a specific timeframe.

Brian A. Johnson, an analyst with Barclays Capital , predicted in a note to clients this week that Ford would announce a dividend early next year and pay 36 cents for 2012, increasing to 55 cents in 2015.

“The key debate around Ford continues to be the sustainability of — or potential for improvement in — Ford North America pretax profits, especially in light of tailwinds from pricing and what may turn out to be lower than previously guided headwinds from commodities and structural costs,” Mr. Johnson wrote.

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Economix Blog: Debating a Labor Contract on Facebook

A screen shot of a U.A.W. Facebook page.

DETROIT — As Ford’s 41,000 hourly workers weigh the merits of their proposed four-year contract in plants and union halls across the United States this week, their debates have spilled onto Facebook, providing a glimpse into which issues are influencing their votes most.

For the first time, the United Automobile Workers union has been using social media to communicate with its members during the contract talks in Detroit, and the most intense back-and-forth has occurred in the last few days, as ratification voting got under way at Ford.

Some bemoaned the lack of a wage increase while Ford’s two top executives got bonuses totaling about $100 million. Others criticized the continuation of a two-tier wage scale.

Even those who said they supported the deal acknowledged being unhappy with many portions of it. Some suggested the deal would be much better received if it covered just two years instead of four, so the terms could be revisited sooner.

One of the union staff members who administer the “U.A.W. Ford Department” page and worked closely with the bargaining team during talks, conceded that the agreement was less than ideal but argued that circumstances did not allow for anything better.

“In 2015 we will do better,” the post said. “This is not the last agreement we will ever settle and hopefully our economy, our image, and our ability to bargain with a bigger stick will be better in the future. But this is not the time to wage this war.”

As it became apparent that more workers were voting “no,” talk turned to the possibility of a strike as soon as next week.

A man who identified himself as working in the body shop of Ford’s Kentucky Truck Plant in Louisville, said the mood had become “somber and quiet” there.

A few workers noted that Ford’s chief executive, Alan R. Mulally, was an executive at Boeing during a 69-day strike in 1995, saying that the deal that workers at that company eventually approved was worse than the one they rejected to begin the walkout.

A Ford worker in Louisville expressed concern that any gains made by a strike against Ford would be overshadowed by wages lost while on the picket lines. The U.A.W. pays its members $200 a week for strike duty, roughly one-fifth of full wages.

The U.A.W. had posted updates to Facebook on Tuesday and Wednesday mornings indicating that early voting was around 50-50.

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G.M. Says Opel Unit Not for Sale

DETROIT — General Motors is not interested in selling its European unit, Adam Opel, the carmaker’s chief executive said Wednesday, countering widespread speculation.

“I will say this: Opel is not for sale,” the executive, Daniel F. Akerson, said. Mr. Akerson, speaking to reporters at a Detroit assembly plant after a ceremony to open contract talks with the United Automobile Workers union, declined to elaborate on G.M.’s plans for Opel.

Two weeks ago, G.M. lashed out at the chief executive of Volkswagen, Martin Winterkorn, accusing him of fanning rumors about an Opel sale. A German newspaper quoted Mr. Winterkorn as saying a Chinese carmaker, rather than the Hyundai Motor Company, would probably be interested in buying Opel. Two German magazines also published reports in June that G.M. might be looking to sell Opel, possibly to Volkswagen.

“Opel has been part of the G.M. family since 1928 and remains important to the company,” G.M. said in the statement July 13 that criticized Volkswagen. “G.M. is pleased with Opel’s solid progress over the last year in turning around its business, and the company continues to invest in outstanding products for the European market.”

But the statement stopped short of saying that Opel, which has struggled during the downturn in Europe’s economy, was not on the market, allowing talk of a potential sale to linger.

G.M. made a deal in 2009 to sell Opel to a consortium headed by the Canadian parts supplier Magna, but the board, installed after it emerged from bankruptcy protection, canceled the sale, which had been backed by the German government and labor unions. The deal to sell Opel was reached at a time when G.M. was streamlining its operations and selling or shutting divisions that were losing money or not critical to its core business.

Since then, G.M. has been following an ambitious overhaul at Opel, aimed at making the division profitable in 2012 through a 20 percent reduction in capacity and the elimination of 8,300 jobs.

G.M. is introducing an Opel version of the Chevrolet Volt plug-in hybrid car, called the Ampera, in Europe this summer as part of its effort to rejuvenate the division.

Bill Vlasic contributed reporting.

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