Cost cuts help Ford post profit
— -- With sales shrinking throughout the industry, Ford recorded the gain mostly through aggressive cost cutting. It was helped by almost $1 billion combined profits from European and South American sales.
The quarterly profit compares with a $282 million loss in the quarter last year. Excluding special items, Ford earned 20 cents a share, beating the 16 cents expected by analysts polled by Thomson Reuters.
Investors reacted strongly, boosting Ford shares 11.7% to close at $8.40.
Ford plans to launch three vehicles this year, a crossover called the Ford Flex, the Lincoln MKS sedan and a new F-150 pickup. A car it sorely needs now, the small and gas-stingy Fiesta, is not due till 2010.
CEO Alan Mulally said he is "encouraged" by the results and the sign that the effort to better harness Ford's diverse operations around the world "will bear fruit." He says the company remains on track for its projection of full-year profitability in 2009.
Analysts were complimentary. Calling it a "blowout quarter," Burnham Securities analyst David Healy said it shows cost cutting is starting to pay off. But he says he suspects Ford may have "bunched a whole year's worth of good news" in the three-month period.
Ford's earnings "are particularly impressive for them against a weak economy and relatively poor auto sales," said Mark Warnsman, analyst for Calyon Securities. He credited the company's "right sizing."
Argus Research analyst Kevin Tynan added that Ford, under Mulally, is more forthright with Wall Street. "They consistently under-promise and over-deliver."
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