Ford posts first full-year net profit since 2005

Ford Motor Co. posted 2009 earnings of $2.7 billion yesterday, its first full-year profit since 2005, and said it expected a 2010 profit amid market share gains and a slow US auto sales recovery.

The company, whose fourth-quarter profit soundly beat Wall Street forecasts, attributed the full-year profit in part to cost-cutting, gains from debt reduction efforts, good results from its financing arm, and stronger pricing.

The automaker repeated its forecast that 2011 would be "solidly profitable," but chief financial officer Lewis Booth cautioned that Ford still had to take steps to address its "uncompetitive balance sheet" and was watching for more signs that a fragile US economic recovery would continue. For the fourth quarter, Ford posted a profit of $868 million, or 25 cents per share, compared with a year-earlier loss of $6 billion, or a $2.51 per share. Revenue rose to $35.4 billion from $29 billion.

Operating profit excluding one-time items was 43 cents per share. On that basis, analysts on average expected 26 cents, according to Thomson Reuters.

Ford, the only large US automaker not to reorganise under a government-supported bankruptcy in 2009, gained US market share last year amid the troubles of its US -based rivals General Motors Co GM.UL and Chrysler, which is now under management control of Italy's Fiat SpA.

Ford posted losses totalling $30 billion from 2006 through 2008, including a record net loss of $14.7 billion in 2008.

The automaker said it expects its US market share to remain flat or increase in 2010.

Ford reported $3.1 billion of positive cash flow in the fourth quarter from its automotive operations. With the positive cash flow in the second half of 2009, Ford's total cash burn was $300 million for the year, compared with a whopping $19.5 billion in 2008.

The automaker is saddled with a much heavier debt load than GM and Chrysler, which had their balance sheets cleansed during their bankruptcy reorganisations.

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 healthcare plan for the United Auto Workers union.

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 US. The automaker previously announced that it also would pay merit increases for US salaried workers.

The No. 2 US automaker had cash and marketable securities in its automotive operations of $25.5 billion at the end of 2009, compared with $23.8 billion at the end of September.