Ford posts $1.2 billion profit

[tgagneguam]

Ford posts $1.2 billion profit

By Eric Mayne / The Detroit News

Ford Motor Co. today reported a second-quarter net income of $1.2 billion, despite a loss by its worldwide automotive operations, which was offset by record profits from the automaker's huge financing arm.

Ford Motor Credit Company reported a net income of $897 million, up $496 million from the $401 million posted in the second quarter of 2003.

“Results were very strong for the quarter, with significant improvements in credit losses,” said Mike Bannister, Ford Credit chairman and CEO.

Ford alerted investors in June that it expected a jump in earnings prompted by a significant decline in the number of profit-draining vehicle repossessions.

“Improvement in the U.S. economy helped,” Bannister added.

Higher used-vehicle prices and the low interest rate environment also played a role in Ford Credit's performance, the automaker said.

A $57 million loss by Ford's automotive sector was attributed to $140 million in charges accumulated by a $120 million investment in fuel cell supplier Ballard Power Systems and $20 million to complete restructuring at Ford of Europe.

Ford also increased its full-year earnings guidance by 15 cents. It now ranges from $1.80 to $1.90.

“I am pleased that we continue to make solid progress in this extremely competitive environment,” said Bill Ford, chairman and CEO. “Although the remainder of the year includes many challenges, we'll generate lots of excitement with the introduction of new products such as the Ford Five Hundred, Freestyle and Escape Hybrid, the Land Rover Discovery/LR3 and the new Ford Focus in Europe.”

CASH

[tgagneguam]

A quote from UBS analyst, Robert Hinchliffe, in an online Reuter's report:

"Ford Credit is behind the (earnings) surprise. At some point we are going to have to see the auto profits lead the way."

I agree, and it points to the silliness of this shrink-to-become-profitable hype.

[xellow]

Their stratagy is one to either make or break. Some Market analists think Ford will destoroy the company this way others think he will become a powerhouse within a few years.

[SUPERBADD75]

first will come the new products, then will come the automotive profits. it will happen. Ford will rise to the top in short order. don't forge thow many projects they have out there right now.... Jag, Aston, Land Rover, all projects that are costing lots of dough and making little. it will turn around when the mainstream cars make the corner.

[stewacide]

The products are coming: it's all up to the marketing people now.

Just looking at the specs, technologies, and platforms involved the new Fords (500, Freestyle, Euro-Focus, NA-Fusion, etc.) WILL be the best in class. The new all-aluminum Jags' WILL make the competition from BMW/MB/Audi look silly. The new Land Rovers/Range Rovers will be untouchable. Mazda should continue to corner the market on affordable, practical sportyness. Volvo should continue to bring out class-leaders like the S40.

...the ten-billion-dollar-question is are consumers ready to consider a Ford as being better (and not just cheaper) than a Toyota? Is Jag' on luxury buyers radar anymore? Can Mazda improve their distribution fast enough? Are people ready to consider Volvos stylish?

What I fear is then ending up with all these great products, but consumers unwilling to buy them in large enough quantities in this generation (it took years to beat these brands down, it may take years to build them back up again).

[xellow]

Originally posted by stewacide@Jul 20 2004, 05:38 AM
...the ten-billion-dollar-question is are consumers ready to consider a Ford as being better (and not just cheaper) than a Toyota? Is Jag' on luxury buyers radar anymore? Can Mazda improve their distribution fast enough? Are people ready to consider Volvos stylish?

What I fear is then ending up with all these great products, but consumers unwilling to buy them in large enough quantities in this generation (it took years to beat these brands down, it may take years to build them back up again).

Ah yes, the old rep problem at Ford.
Its more to overcome than mt everst it self.

I guess it will be in the hands of the marketing team.

Hopefully they ax these slogans;

Have you driven a Ford lately?
Or
If you havn't looked at Ford lately look again...

This will just remind people of a time when Ford product was just plain As$*.
Its time they moved on from that.

[MN12Fan]

Originally posted by xellow+Jul 20 2004, 11:22 AM--></div><table border='0' align='center' width='95%' cellpadding='3' cellspacing='1'><tr><td>QUOTE (xellow @ Jul 20 2004, 11:22 AM)</td></tr><tr><td id='QUOTE'> <!--QuoteBegin-stewacide@Jul 20 2004, 05:38 AM
...the ten-billion-dollar-question is are consumers ready to consider a Ford as being better (and not just cheaper) than a Toyota? Is Jag' on luxury buyers radar anymore? Can Mazda improve their distribution fast enough? Are people ready to consider Volvos stylish?

What I fear is then ending up with all these great products, but consumers unwilling to buy them in large enough quantities in this generation (it took years to beat these brands down, it may take years to build them back up again).

Ah yes, the old rep problem at Ford.
Its more to overcome than mt everst it self.

I guess it will be in the hands of the marketing team.

Hopefully they ax these slogans;

Have you driven a Ford lately?
Or
If you havn't looked at Ford lately look again...

This will just remind people of a time when Ford product was just plain As$*.
Its time they moved on from that. [/b][/quote]
Have you heard of Ford lately?

Do any of your cars have blue ovals on them?

Can I sell you this horse with "GT" painted on its side?

[Smaart Aas Saabr]

The F150 sells like crazy and has for ever...

Ford may have put a lot of money into it, but there wasn't any risk involved in the project, heck, I could put F150 badges on a wheelbarrow and sell almost as many...

Know how many fleets rely on only F150's because of agreements with Ford / like the name?

[AJR]

Originally posted by laserwizard+Jul 20 2004, 10:06 PM--></div><table border='0' align='center' width='95%' cellpadding='3' cellspacing='1'><tr><td>QUOTE (laserwizard @ Jul 20 2004, 10:06 PM)</td></tr><tr><td id='QUOTE'> <!--QuoteBegin-tgagneguam@Jul 20 2004, 01:13 PM
A quote from UBS analyst, Robert Hinchliffe, in an online Reuter's report:

"Ford Credit is behind the (earnings) surprise.&nbsp; At some point we are going to have to see the auto profits lead the way."

I agree, and it points to the silliness of this shrink-to-become-profitable hype.

That isn't a very well-thought out statement. GM relies too much on rebates and fleet sales (all unprofitable) and Ford has actually IMPROVED its financial position by allowing their product mix to be less subsidized than GM. Sometimes, while it goes against common thinking, it is better to retreat on a sales position to one that is profitable than to continue to push sales for the sake of sales. Selling fewer cars at a higher per unit profit does translate into profitability. GM has all but abandoned common sense by pursuing market share even if they have pathetic margins. Ford was able, for example, with the new F-150 to take a vehicle that cost a thousand or more than the one it replaced and sell it with lower rebates; because it is a superior overall product than its competition, sales volume has actually increased and the sales have been driven by that extra money spent in the product, not in rebates. Ford is pursuing this strategy after it has jetisoned worthless products. The Mustang is likely to be a sales success that won't need rebates as well to sell it which will be a big improvement over its predecessor. Unfortunately Ford is saddled with a mediocre minivan that can only be moved by higher rebates - a poor decision by Ford to simply do a minor change on this product than to really innovate. Had they spent the money to improve this to market class best, their rebate costs would have been a third of what they are, thus making up the difference in the development cost. My guess is that Ford won't be making that mistake again. [/b][/quote]
I agree completely with this analysis. The F-150 is a fantastic truck and the Mustang should sell very well. The GT sports car shows that Ford can compete against anybody on the planet if it just put its mind to it. I just wish Ford would pay as much attention to its cars like its trucks. The F-150 and new Super Duty are going to form probably the strongest truck lineup in the market. This same focus and listening to customers SHOULD be the driving point behind the cars as well.

I am glad you mentioned the minivans because I feel these are Ford's only duds this year. I don't think the effort was really there, unlike the F-150, GT, Mustang, Five Hundred, and Freestyle. I think there are a few reasons why Ford went soft on the minivans.

1) The development money just was not there.
2) The minivan segment looked dried up a few years ago. Now, it is beginning to boom again. Ford planners missed that.
3) Maybe they thought the upcoming Freestyle crossover was the way to go and spent more time and effort on it.
4) Rumors are that a new minivan based on the Mazda 6 will come out in 2 years, so why spend lots of money now when things are tight.

In any case, Ford better know that it has to hit a grand slam with its next minivan. I would think GM would know that as well, but you never know. The thing is, both companies have key figures from Chrysler's previous minivan projects. Use their expertise! Not only is Chrysler the one to shoot at, but now, Toyota and Honda are at an even higher level. Coming out with a smash hit in the minivan market should cover up one of the holes in Ford's armor.

I like where Ford is going with its new and upcoming models, but now is not the time to let off. Instead, use those profits to push the company into overdrive - and really do it, not say it!

[stewacide]

Originally posted by Smaart Aas Saabr@Jul 20 2004, 10:52 PM
The F150 sells like crazy and has for ever...

Ford may have put a lot of money into it, but there wasn't any risk involved in the project, heck, I could put F150 badges on a wheelbarrow and sell almost as many...

Know how many fleets rely on only F150's because of agreements with Ford / like the name?

You're underestimating what a gamble the F-150 was for Ford. They spent FAR more on the development program than they needed to (they basically designed the interior 5 times over for all the different trim levels), and combined with the higher per-unit cost if the new F-150 didn't sell in larger numbers and with lower incentives (i.e. if people kept buying like they always had at the same price) it would have killed the profitability on the F-150, which is to say Ford's profitability in general.

And re: the minivans all-new vans (based on the Mazda6/Fusion) are supposed to be out in 2-3 years, so the Freestar is just a stopgap. Crutially the vans are supposed to be paired in the Oakville plant with the new Mazda6-based crossovers (i.e. the Aviator concept and related Ford, Mazda, etc.) - so they'll be a lot more flaxable in terms of volume. So whether the minivan segment grows or declines (nobody seems sure) they should be able to stay profitable.

[awalbert88]

The F-150 was a gamble in that they over-engineered it, dumping more money into it than anyone has ever put into an automotive project in history. But it wasn't a sales gamble, because the F-series has been the top-selling vehicle for nearly three decades.

GM is trying to maintain market share while improving quality and product design division by division. Ford has fewer domestic divisions to worry about, but has still had to focus more on profitability than market share. I think Ford's process of essentially starting from scratch and trying to prove themselves to the world all over again is the smart move. GM might be able to hold their share (with small fluctuations), but it will take far longer for perceived quality to rise. Toyota is still perceived as being the most reliable and dependable nameplate, but they're far from it. Buick, Cadillac, and Pontiac have all passed them in long-term dependability. But the average consumer doesn't know that.

[tgagneguam]

You will find this interesting tidbit of news today (07-21-04):

DETROIT, July 21 (Reuters) - General Motors Corp. Wednesday posted higher quarterly earnings, boosted by record results from its credit arm and stronger profits from its core automotive business.

GM's second-quarter earnings, at the high end of Wall Street forecasts, rose to $1.34 billion, or $2.36 per share, up from $901 million, or $1.58 per share in the year-ago quarter...

GM's global automotive earnings rose to $529 million in the second quarter, up from $140 million in the year-ago quarter, with stronger results in all regions except Europe...

Profits from GM's North American automotive operations rose to $328 million, up from $83 million in the second quarter last year, despite a drop in its U.S. market share...

GM's sales rose to $49.15 billion in the second quarter from $45.88 billion previously...

This is similar to Ford's recent reports with the GMAC producing a majority of the profits. You will note, however, the revenue was up higher for GM than Ford (at 7.1% or so), and profits were higher, too. I know, just one quarter, right?

I'm curious by the leniency granted to Ford on their products. While people can tolerate Ford's clear just-average Freestar minivan (hey, a totally new one is on its way by 2006), it seems absolutely intolerable to wait the same amount of time for GM's new large SUV's or a year more for their large FS pickups. And to think that the 500 (a derivative-styled Passat) will draw in lots of buyers without incentives to keep the plant productive (i.e., profitable) is just plain curious to me. I don't recall unaminous praise on this site for any vehicle that Ford has recently launched or plans to launch soon: F-150, Freestyle, Mustang, Montego, 500, or the Focus. Yet now we have an incrediblly forgiving group of people. What gives? I admit that I actually like all the aforementioned vehicles, but I'm skeptical that they will contribute to a consistently significant turnaround at Ford.

[doh]

I'm curious by the leniency granted to Ford on their products. While people can tolerate Ford's clear just-average Freestar minivan (hey, a totally new one is on its way by 2006),

Thank god they are redoing it, not that they really did a big change from the Windstar in appearances anyways. It's been a dismal falure dropping over 6% market share in Canada alone. Thats before the new Chyrsler with 2 rows of fold flats. Rember to make it in this market they are the ones to beat, thats where you gain your market share is taking it from DCX.

[Hudson]

Ford's Freestar and Monterey ads in the US were laughable. Just as they advertised that the Freestar had these revolutionary fold-flat third-row seats (of which, Honda, Toyota, Nissan, and Mazda all had prior), Chrysler not only folded the third row but the second as well. And the morons in the Ford ads were CARRYING the third row out of the pictured Dodge/Chrysler minivan. Hey idiot! They have WHEELS!

[amark329]

Hudson that's funny. :lol: :P And also what is funny is that GM made $1.3 billion dollars and ford made $1.2 billion. Close but still behind ford. hahahaha