DETROIT -- Ford Motor Co. posted a fourth-quarter profit today and swung to its first full-year profit since 2005 with the help of accounting gains while forecasting an operating profit for this year.
The results showed continued progress in CEO Alan Mulally's recovery efforts in the face of the weakest U.S. sales in 27 years.
“While we still face significant business environment challenges ahead, 2009 was a pivotal year for Ford and the strongest proof yet that our One Ford plan is working and that we are forging a path toward profitable growth by working together as one team, leveraging our global scale,” Mulally said in a statement.
Ford reported fourth-quarter net income of $868 million compared with a loss of $5.9 billion a year earlier. Revenue rose to $35.4 billion from $29 billion.Ford snapped a three-year streak of losses by recording a net profit of $2.7 billion for 2009 compared with a loss of $14.8 billion in 2008. Last year's results were aided by large gains from debt-reduction efforts and other items.
Ford's operating profit, after taxes, for the fourth quarter was $1.6 billion compared with a loss of $3.3 billion a year ago. For the year, Ford's operating profit was $8 million compared with a loss of $7.3 billion a year earlier.
Ford finished the year with $25.5 billion in automotive gross cash and $34.3 billion in automotive debt.
"We're going to be profitable in 2010,'' said CFO Lewis Booth, issuing the automaker's first forecast for the year. Three months ago, Ford changed its 2011 outlook to “solidly profitable” from “break-even or better.”
Booth reiterated the “solidly profitable” plan today.
Ford posted losses totaling $30 billion from 2006 through 2008, including a record $14.7 billion net loss in 2008.
Ford is also raising production in the first quarter in North America by 20,000 units to 570,000 units from previously announced 550,000 units.
Booth told reporters today that Ford's 2009 profit was largely influenced by debt restructuring. Ford also cut its automotive structural costs by $500 million in the fourth quarter and by $5.1 billion for the year, surpassing its full-year goal of $4 billion. That was driven largely by lower manufacturing and engineering costs as well as job cuts.
Ford reported $3.1 billion of positive cash flow in the fourth quarter from automotive operations. With a positive cash flow in the second half of 2009, Ford's total cash burn was $300 million for the year, compared with $19.5 billion in 2008. Ford expects positive cash flow in 2010.
“We're encouraged by our cash position,” Booth said. “We are also seeing the benefit of our production being ramped up again.”
Booth said Ford faces the challenge this year of keeping inventory levels flat, while increasing production in the United States. Ford brands now have about a 60-day supply, considered the industry norm.
In North America, Ford posted a pre-tax operating profit in the fourth quarter of $707 million versus a loss of $1.9 billion in the same period of 2008. Fourth-quarter revenue rose to $15.8 billion from $11.3 billion.Ford reported profits in its operations around the world. In South America, Ford had a pre-tax operating profit of $369 million up from a profit of $105 million a year earlier.
In Europe, Ford's pre-tax operating profit of $305 million compared with a loss of $338 million in the fourth quarter of 2008. The boost was due to reduced material costs, higher volumes, strong net pricing and lower structural costs. Ford also benefited from Europe's scrappage programs, which provided government incentives to buyers of small cars.
Ford ‘s Asia-Pacific Africa region had a fourth- quarter pre-tax operating profit of $19 million vs. a loss of $208 million a year earlier. Ford said the gain stemmed from favorable net pricing, profits from Ford's joint ventures in China and reductions in structural costs.
Ford's results come as rival Toyota Motor Corp. is mired in a crisis over faulty accelerator pedals that have led to a massive recall of top-selling vehicles and the temporary suspension of production and sales.
Ford shares have reflected a surge in investor expectations. The stock has jumped nearly six-fold in a year from under $2 to $11.55 on Wednesday.
With Ford's product development plans on track, the main uncertainties surround whether the U.S. economy and auto sales will show a gradual recovery and how quickly Ford can address its heavy debt load, analysts say.
“We have an uncompetitive balance sheet,” Booth said. “The most important thing is to return the business to fundamental health and pay down our debt.”
The automaker borrowed more than $23 billion in late 2006, two months after Mulally joined Ford from Boeing Co., to finance restructuring plans in what the CEO often refers to as Ford's “home improvement loan.”
Ford said it ended the year with total automotive debt of $34.3 billion, up from $26.9 billion at the end of the third quarter mainly due to contributions to the retiree health-care plan for the UAW.
As a result of its full-year profit, the automaker plans to pay profit-sharing of about $450 each to its 43,000 eligible UAW workers in the United States. It will be the first profit-sharing payment to UAW workers since 2004.
Ford previously announced that it also would pay merit increases for U.S. salaried workers.
Ford's U.S. sales fell 15.4 percent in 2009, less than the U.S. auto industry drop of 21 percent, to 10.4 million vehicles, the lowest total since 1981. Ford gained 1 percentage point of U.S. market share to 15.5 percent, its first advance in its home market since 1995.
“If there is any kind of recovery, they should be profitable in 2010,” Autoconomy analyst Erich Merkle said before today's results were released. “I think Ford is looking to under-promise and over-deliver.”
Booth today suggested that the extent of Ford's comeback is beyond its control.
"The single most important thing is to see the economic recovery ... continue," he said. "We are worried about how fragile that may be."
Reuters contributed to this report.