Ford Expected To Post Strong First Quarter Earnings

by Jeff Gilbert
WWJ AutoBeat Reporter

Breaking News: Ford Earns $2.6 Billion in 1st Quarter. Click here for the update.

Ford is expected to get the year off to a good start, with a solid first quarter profit.

"Ford's been doing very well," says analyst Aaron Bragman of IHS Automotive. "They've had a string of hits on their hands. Sales of a lot of their new vehicles are doing increasingly well."

Analysts surveyed by the Associated Press expect Ford to post earnings of around $2.1 billion. The numbers will be revealed at 7 AM.

Ford made $6.6 billion in 2010, double it's 2009 earnings, and it's best showing in over a decade. Still, the company's stock price tumbled, after earnings in the fourth quarter were below analyst expectations.

First quarter sales are up 12 per cent, and Ford has trimmed its debt from $33.6 to $14.5 billion. That's reduced interest costs by $1 billion a year.

Going forward, analysts remain concerned about the impact of gas prices that have topped $4 a gallon in parts of the country, and are approaching that mark everywhere else.

"One of the risks we see for Ford is higher gas prices," says Bragman. "Even though Ford has an increasing number of fuel efficient vehicles, the real profits for Ford are in large trucks, SUV's, just like it is for any other automaker"

Ford sites new small cars, like the subcompact Fiesta and a totally redone Focus as evidence that the company is in a far different place than it was when gasoline prices peaked in 2004 and it ate into car companies profits.

"It's not when people will buy, it's what people will buy," said Ford President of the Americas Mark Fields at the recent New York Auto Show, as the company introduced a new Taurus big car, with improved fuel economy.

Fields saying they didn't expect higher gas prices to slow the recovery, but they do expect them to move people into smaller vehicles, and more fuel efficient cars and trucks in all categories. That's why, Fields says, Ford has taken pains to improve the fuel economy of its vehicles.

"We've been very pro-active over the last couple of years, taking a point of view as a company that gas prices are going to continue to rise."

Follow Jeff Gilbert on Twitter @jefferygilbert