Ford Motor Co (NYSE:F - News) posted a $2.1 billion first-quarter profit that exceeded Wall Street forecasts as North American production and sales picked up, and it raised its 2010 outlook to "solidly profitable."
Ford also raised its second-quarter North American production plan and its 2010 outlook for its Ford Motor Credit financing arm.
The company's shares slipped 0.7 percent in premarket trading on Tuesday after touching a five-year high on Monday.
Chief Financial Officer Lewis Booth said the results, which included operating profits at all of its automotive units, showed Ford benefiting from market share and pricing gains.
He cautioned it would be "unwise" to consider the profit a running rate for the year. Nevertheless, Ford expects 2010 net income to exceed the first-quarter result, he said.
Net income amounted to $2.1 billion, or 50 cents per share, in the quarter, compared with a year-earlier net loss of $1.4 billion, or 60 cents per share. Revenue rose to $28.1 billion from $24.4 billion.
Excluding one-time items, earnings were 46 cents per share. On that basis, analysts on average expected profit of 31 cents, according to Thomson Reuters I/B/E/S.
This was Ford's highest quarterly pretax profit in six years.
In addition, it was the fourth consecutive quarterly profit for Ford, which also reported a full-year 2009 profit, snapping a streak of annual losses totaling $30 billion from 2006 through 2008.
Ford Credit had its highest operating profit since the second quarter of 2005, and it now expects 2010 earnings to be about the same as in 2009, rather than declining as it had forecast earlier.
The automaker has benefited from improved public perception, in part because of the government bailouts of General Motors (GM.UL) and Chrysler, and Toyota Motor Corp's (Tokyo:7203.T - News) massive U.S. vehicle recalls and sales halt in the first quarter.
Ford's edge may begin to fade with Toyota offering record incentives to boost U.S. sales, GM repaying government loans and Chrysler declaring a first-quarter operating profit.
"Just looking at the first-page numbers, they had a fantastic quarter," said Morningstar analyst David Whiston. "But it would not be easy competition going forward ... It will get a little bit harder for Ford to keep it up in North America."
Booth said Ford was watching Toyota's incentives closely for their impact on U.S. industry sales, but said his company's net pricing in North America in the first quarter was "about flat" compared with the fourth quarter of 2009.
PAYING DOWN DEBT KEY
Ford's results follow Chrysler's report earlier in April that it made a first-quarter operating profit. GM plans to release first-quarter results in mid May.
Ford reported its Swedish brand Volvo's results as special items in the first quarter following its announcement of a definitive agreement to sell the unit to China's Geely (HKSE:0175.HK - News). Volvo also was profitable in the quarter.
The results leave Ford investors focused on the sustainability of the turnaround led by Chief Executive Officer Alan Mulally.
Ford borrowed more than $23 billion in late 2006 to fund the turnaround, allowing it to avoid the U.S. government-supported bankruptcies that snared GM and Chrysler last year, but leaving it with far more debt than its U.S.-based rivals.
Ford ended the first quarter with automotive debt of $34.3 billion, an increase of $700 million from year-end 2009, but paid down $3 billion of debt in April that will be reflected in second-quarter results.
The company also had an automotive operating cash outflow of $100 million in the first quarter, but expects positive operating cash flow for the year.
The speed of Ford's turnaround in part remains tied to the strength of the U.S. economy and the pace of the recovery in U.S. auto sales, which last year had sunk to 10.4 million vehicles, their lowest level since the early 1980s.
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