Ford has surprised industry analysts with some good news for a change. With seven consecutive quarters where they have posted losses the blue ovals star was definitely fading but the sceptics have been silenced with news of a second-quarter profit in 2007.
This time last year Ford reported a second quarter loss of $US317 million while twelve months and much pain later they are reporting an almost billion dollar improvement. Reported profit for the second-quarter of 2007 is US$750 million on the back of total revenues of US$44.2 billion up from US$41.9 billion in the same period last year.
In the face of numerous losses this is certainly good news but we need to take a look at what drove the profit and unfortunately it wasnâ€™t North American car sales. However the loss from itâ€™s North American operation did shrink to US$279 million (before tax) while Fordâ€™s core automotive operations achieved a profit of US$378 million (before tax).
Fordâ€™s North American sales fell 9 percent in the second quarter in part due to Fordâ€™s move away from discounted sales to car rental fleet operators. Interestingly and no-doubt a sign of the times, Fordâ€™s finance division performed well and posted a profit of US$62 million.
Ford is systematically working through its restructuring plan which includes the closing of 16 plants and the shedding of 45,000 jobs which is just staggering and gives you some idea how â€˜overweightâ€™ this Automotive monolith has been. The sale of Jaguar and Land Rover is imminent and a â€˜strategic reviewâ€™ of their Volvo outpost is expected to be completed by the end of this year.
â€œOverall our plan is working and is showing clear signs of progress,â€ Ford CEO Alan Mulally said today. But, he also noted, â€œWe have a long way to go.â€
In what will be one of the greatest industrial turnarounds in history, Ford is expecting to be consistently profitable by 2009.
Source : Automotive News