Ford drives back into the black with $2.7bn profit

US car-maker benefits from collapse of rivals and launch of popular new models
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The Independent Online

While its two biggest US competitors went bust in 2009, Ford launched popular new models, won market share and posted its first profit in four years.

Releasing unexpectedly strong annual results, Alan Mulally, the former Boeing executive brought in to run Ford in 2006, said that not only was the company back in the black to the tune of $2.7bn (£1.7bn), but that it would stay there. "While we still face significant business environment challenges ahead, 2009 was a pivotal year for Ford," he said. "We are more convinced than ever that Ford has the right plan to lead us through the near-term economic and external operating pressures and continue to deliver profitable growth."

Mid-size cars such as the Ford Fusion and small sports utility vehicles such as the Escape were winners in the marketplace, and the latest Fiesta, which has already sold 600,000 vehicles in Europe, is to be launched in the US, with production starting in the next few weeks. The company revealed plans to increase production for the first three months of this year, too. It is now expecting to build 570,000 vehicles, compared with its earlier estimate of 550,000.

Ford has been able to capitalise on the financial and public relations difficulties of its Detroit-based rivals, General Motors and Chrysler, both of which collapsed into bankruptcy last spring and had to be bailed out using US and Canadian taxpayer money.

It has also been producing cars at a more profitable rate thanks to new union contracts and much lower staffing levels. The number of hourly wage-earners at Ford has halved since 2005.

The $2.7bn net income figure compared to a record loss of $14.6bn in 2008. The improvement came despite a 14 per cent decline in revenue. The bottom line was helped by a return to profit in Ford's credit arm, which offers financing to car buyers, and by a particularly large improvement in South America. In Europe, where Ford is also back in the black, it is planning to sell its Volvo brand to the Chinese manufacturer Geely.

Ford's chief financial officer, Lewis Booth, said the company would now turn its attention to improving its balance sheet. It mortgaged almost all its assets, including the iconic oval logo, in order to raise cash before the downturn, and while that proved an advantage in keeping it out of bankruptcy, it now faces nimbler rivals in GM and Chrysler, who had debts forgiven in bankruptcy.

"We're not kidding ourselves," Mr Booth told reporters. "We know we have a huge amount of debt and an uncompetitive balance sheet."

Ford yesterday suspended production of a van sold in the Chinese market, which includes accelerator pedals made by CTS, the supplier to Toyota, and is moving to take advantage of the disarray at Toyota, which has had to launch a massive recall due to faulty pedals.

Mr Mulally said. "Clearly, everybody realises now that we're competing with the best in the world, including Toyota, so we anticipate that going forward in 2010, we see more and more interest in Ford."

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