Ford 2010 Profit Highest in Decade as Sales Rise

The bodies of farmers killed by police during a land eviction, lie covered on a hospital floor in Curuguaty, Paraguay, Friday, June 15, 2012. Paraguay deployed its army on Friday to resolve the violent land dispute in Curuguaty, a remote northern forest reserve, where 17 people have been killed in gun battles between police and landless farmers when police were trying to evict about 150 farmers from the reserve, which is part of a huge estate owned by a Colorado Party politician opposed to leftist President Fernando Lugo. (AP Photo)

Ford earned its biggest profit in more than a decade in 2010 as robust vehicle sales and years of cost cuts paid off. But disappointing fourth-quarter results rattled investors Friday and sent the company's stock price lower.

Ford shares fell 12 percent to $16.63 in late morning trade after the company missed analysts' expectations. The reaction showed the difficulties Ford faces, even though it's remade itself over the last four years.

Ford's net income totaled $6.6 billion, or $1.66 per share last year, more than double the $2.7 billion, or 86 cents, from 2009. Before charges for debt reduction and the discontinuation of its Mercury brand, Ford would have earned $1.91 per share, short of the $2.05 analysts expected.

Ford's fourth-quarter profit also missed Wall Street's forecasts. Net income dropped 79 percent to $190 million, or 5 cents per share. Results included a big charge for lowering its debt. Without it, Ford would have earned 30 cents per share, still far below the 48 cents analysts anticipated.

Ford said it warned investors about the one-time charges but didn't keep them updated when it decided to pull back on incentive spending in Europe, which led to a drop in sales and profits there. The company said it also spent more marketing new products like the Ford Explorer in the fourth quarter than some analysts had anticipated.

For investors, the disappointing end to 2010 interrupts a string of successes for Ford. The company's car sales and stock price have surged, its reputation for quality has revived and it announced on Friday that U.S. hourly employees will get profit-sharing checks that average $5,000 this year. I

Four years ago, Ford had posted a string of huge losses and its future was in doubt. It got a $23.5 billion loan by mortgaging its factories and other assets, including its blue oval logo. Then it shed most of its brands, closed or sold a quarter of its plants and cut its global work force by more than a third. It also slashed labor and health-care costs, plowing the money back into the design of some well-received new products like the Ford Fusion sedan and Ford Edge crossover.

But challenges remain, as investors showed Friday. Ford must fight to keep its sales growing, continue to pay off its huge debt and rescue its flailing Lincoln brand. And it is setting high expectations.

"2011 will be even better than 2010," Ford CEO Alan Mulally said.

Last year's results included $853 million in charges for reducing debt. Ford also reported a $339 million charge for the discontinuation of the Mercury brand. Ford announced last summer it would stop producing the brand by the end of the year.

Debt fell from $33.6 billion to $14.5 billion during the year. The lowers Ford's interest payments by a little more than $1 billion.

Ford's U.S. sales jumped 20 percent last year double the rate of the industry as an improving economy spurred demand for the company's F-Series pickups and other vehicles.

Ford Chief Financial Officer Lewis Booth predicted the company will have another strong year of new products, including the launch of the new Ford Focus in North America, Europe and Asia. The company did not cut back on vehicle development during the recession, he said.

[James93x]

William Ford improves company revenue by over-charging for each vehicle. The Dow Jones is unimpressed with his tactic. Henry Ford sold cars like soft pretzels. Those common models were well-crafted. Fourth Quarter 2010 GDP reported at 3.2%. America developed a steady pace by thought and effort.

[parisdakar]

Wall Street analysts are disappointed?? Ford was nearly out of business. Now, in two years, with the country still in recession, they're posting good revenues, turning a profit, and making decent products. What fantasy land do these Wall Street people live in?

[jgg000101]

wall street is all about "growth". Although ford's profitable, the discontinuation of brands, balance sheet write-downs, and lower european sales are not indicators of future growth. Also, the fact that the sales increases were for ford explorers and pick-up trucks runs against the grain of what is currently happening in the auto industry.

[fedup12]

Funny you should say that. Although I am not sure that this is governments role it seems like Obamas auto company bailout worked. GM and Chrysler have reorganized and have paid most of our tax money back... With interest....

The same cannot be said of Bush's Tarp.

[fedup12]

BTW I own a Ford. Best most solid car I have ever bought.

[Socialization]

No bail out from Obama at Taxpayers expense, no takeover from the Government like GM. Way to go Ford. would buy from them in a minute....

[tsigili]

It will be just a matter of time, before they once again put pennies in profits ahead of public safety, and people stop buying their products AGAIN.

I have seen their "spontaneous combustion" vehicles first hand, and would never trust their cars, in any way.

[retm-w]

And it will just be a matter of time before GM and Chrysler run back to the government for another handout. How about GM "spontaneous combustion" vechicals. Forget about those?

[enough-already]

As Mythbusters has demonstrated repeatedly, it is VERY DIFFICULT to make an automobile gas tank full of gasoline tank explode. When one DOES, it is not the auto manufacturers fault. Sometimes s--t happens, you know?