Ford beats Street estimates, posts $2.6bn Q1 profit
Benefiting from an improving economy, Ford Motor (NYSE:F) posted a 24% increase in first quarter profits on Tuesday as the auto company introduced new cars and raised prices to combat higher commodity costs.
For the first three months of 2011, the company recorded $2.6 billion in net income, or 61 cents per share, compared to $2.1 billion, or 50 cents per share, a year earlier. The results beat analyst earnings estimates of 50 cents per share by a wide margin.
The company's first quarter revenue was $33.1 billion, up from $28.1 billion in the year-ago period, as Ford performed strongly in all regions, particularly in Asia Pacific and Africa, and North America. Analysts expected total revenue of $30.64 billion.
Revenue from its automotive sector rose 22% to $31.0 billion, with sales in North America rising 27%, and sales in Asia Pacific Africa climbing 31%. Ford said the increase reflects favourable volume and mix, as well as higher vehicle prices, helping to offset higher commodity costs, which rose by $300 million in the first quarter.
At quarter-end, the company raised prices by an average of $117 per vehicle, as it said it expects commodity and structural costs to each increase by about $2 billion in 2011, compared to 2010.
"Our business is improving as we achieve growth in volume and revenue, while maintaining our focus on increasing competitiveness," said vice president and CFO Lewis Booth.
Total vehicle wholesales in the first quarter were 1.4 million units, up 150,000 units from first quarter 2010, as every business segment reported higher wholesales.
Looking ahead, Ford said it will remain focused on delivering its One Ford operation plan, which concentrates on the development of new products, and the restructuring and improvement of the company's balance sheet.
Indeed, the auto maker also reduced automotive debt by $2.5 billion in the first quarter to $16.6 billion. At first quarter-end, automotive gross cash exceeded debt by $4.7 billion, an improvement of $3.3 billion from year-end 2010.
The company also took action to increase overall liquidity, including an additional $1.7 billion of capacity on its secured revolving credit facility.
Ford's shares rallied more than 2% on Tuesday, to trade at $15.88 as of 11:58am EST.
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