Ford Motor on course for positive automotive cash flow in 2010, shift to net cash position in 2011

By Jennifer Lanning Drey

Portland, Ore., July 23 - Ford Motor Co. remains on track to post positive automotive-related cash flow for full-year 2010 and expects to shift from an automotive net debt position to a net cash position in 2011, Alan Mulally, its chief executive officer, said Friday during Ford's second-quarter earnings call.

Ford generated positive automotive operating cash flow of $2.6 billion and paid down $7 billion of debt during the second quarter.

The company reported second-quarter net income of $2.6 billion, compared with net income of $2.3 billion in the same period of 2009.

Revenue for the second quarter was $31.3 billion, up $4.5 billion from the comparable prior-year period.

"Overall, we are ahead of where we thought we'd be after this excellent first half. We clearly remain on track to deliver solid profits and positive automotive operating-related cash flow for 2010, and we expect even better results in 2011," Mulally said.

Mulally said the driving forces behind Ford's progress included new products and a leaner global structure.

Ford ended the second quarter with $21.9 billion of automotive gross cash, down $3.4 billion from the cash balance at the end of the first quarter, due to the debt-reduction actions, Lewis Booth, Ford's chief financial officer, said during the call.

The $7 billion of debt repaid during the quarter included $3.8 billion to Ford's UAW Retiree Medical Benefits Trust and $3.0 billion to its revolving credit facility.

Ford ended the second quarter with $27.3 billion in automotive debt.

The company had total liquidity of $25.4 billion at June 30.

Ford Credit funding on track

Booth also reported Friday that Ford Credit, the company's financial services sector, remains on track to achieve its full-year funding plan. The company completed about $6 billion of funding during the second quarter and another $1 billion in July, he said.

Ford Credit's funding structure remains focused on accessing public and private securitizations, asset-backed commercial paper and unsecured debt, he said.

"Our liquidity remains strong and we'll continue to maintain cash balances, funding programs and committed capacity to ensure liquidity adequately meets our funding requirements," Booth said.

At quarter-end, Ford Credit's managed leverage was 6.6 to 1.

Ford Credit reported a second-quarter pre-tax operating profit of $888 million, a $242 million improvement from the second quarter of 2009.

Booth said Ford Credit is expected to continue to be solidly profitable in 2011 but at a lower level than 2010.

Ford is a Dearborn, Mich.-based automaker.

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