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2010 Most Profitable Year In A Decade For Ford

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On: Wed, Feb 2, 2011 at 4:05PM | By: Sherry Christiansen

2010 Most Profitable Year In A Decade For Ford

If you happen to be a Ford Motor Company shareholder, you’ll be happy to hear that Ford has announced a hefty $6.56 billion in profits for 2010. This is Ford’s highest posting in ten years. The company points out three major contributors for those profits: bigger sales, better products, and great prices.

All good news, right? Technically, no. Even though over six billion in profit is nothing to sneeze at, it could have been more. Ford’s fourth-quarter numbers took a nose dive when Ford paid down previous debt and ran up some bills for launching new cars. There was also a dip in sales in Europe. Still, it’s 6 billion in profits!

“We're in transition mode now,” claims Ford CFO Lewis Booth at a media briefing recently. He went on to predict that 2011 will be an even better year. “We've fixed the fundamentals of the business. I think the thing that pleases us immensely is the improvement in the balance sheet

Those who follow the stock exchange will have noticed that Ford shares fell 7.9% to $17.30 at 9:56 a.m. on January 27. This occurred once the Wall Street analysts had their say. “These results significantly call into question the idea that Ford's North American profit margins should expand from the 10 percent level as SAAR grows over next few years,” J.P. Morgan analyst Himanshu Patel said in a statement. “A faster-than-expected cost rise—both structural and variable—seems to have been the primary driver of the fourth quarter earnings miss.”

Over at Ford’s European operations, nobody is popping the champagne corks. They filed a $51 million loss due to higher costs deterring customers.

“We were a little disappointed, but we did the right thing on the European call,” Ford CEO Alan Mulally said. “Clearly, as that situation unfolded, we chose to act decisively and not chase market share and heavily discount our vehicles.”

As with any publicly traded company, Ford is required to open its books for the entire world to see. The numbers broke down like this: The company ended the year with $20.5 billion in gross cash, which helped Ford reduce its debt to $19.1 billion, leaving the Detroit automaker with $7.4 billion floating on a revolver loan.

If these numbers make your head spin, don’t worry. All that’s important is that Ford is in the black and going strong.


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