Ford cuts more automotive debt in Q1, boosts liquidity, profitability

By Jennifer Lanning Drey

Savannah, Ga., April 26 - Ford Motor Co. reduced automotive debt during the first quarter while also increasing overall liquidity, bringing the company closer to investment-grade credit ratings, Alan Mulally, its chief executive officer, said Tuesday during Ford's quarterly earnings conference call.

Ford reduced automotive debt during the first quarter with $2.5 billion of net debt reductions resulting from the redemption of all outstanding trust preferred securities. Automotive debt stood at $16.6 billion at March 31.

In addition, the company took action to increase overall liquidity, including an additional $1.7 billion of capacity on its secured revolving credit facility. Ford's automotive liquidity increased by $2.8 billion from year-end 2010 to $30.7 billion at March 31.

The company had automotive gross cash of $21.3 billion at March 31, an increase of $800 million versus its cash position at the end of 2010.

Ford's automotive gross cash exceeded debt by $4.7 billion at quarter end, representing an improvement of $3.3 billion from year-end 2010.

$2.6B net income

In addition to the balance sheet improvements, Ford also reported first-quarter net income of $2.6 billion, which represented a $466 million increase from the first quarter of 2010. Ford attributed the increase to its new fuel-efficient new products, continued investment in global growth and the strengthening of its core business.

Total company revenue was $33.1 billion in the first quarter, up $5 billion from the first quarter of 2010.

Each of Ford's automotive operations was profitable in the first quarter, Mulally said.

"Our first-quarter performance is a step forward in our delivery of profitable growth for all, not only in 2011, but in the years ahead," he said.

Ford Credit solidly profitable

Ford's financial services segment, Ford Credit, was also solidly profitable in the first quarter, Mulally said later in the call.

Ford Credit reported a first-quarter pre-tax operating profit of $713 million, compared with a profit of $828 million in the first quarter of 2010. The company said the decrease is more than explained by lower market valuation adjustments to derivatives and lower receivables volume.

Ford Credit is expected to be solidly profitable for the full year but at a lower level than in 2010, Lewis Booth, the company's chief financial officer, said during the call.

Ford Credit's liquidity exceeded utilization by about $19 billion at quarter end and the segment is on track to achieve its full-year funding plans, he said.

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

Ford is a Dearborn, Mich.-based domestic carmaker.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.