Amidst the troubled automaker industry, Ford was able to come back. In a tremendous fashion, as the company reported nearly $1 billion in profits while paying its own debt and adding a good amount of market share.
On November 2, the company reported a $997 million third quarter profit, adding profits to gains in market share and improvement in overall quality since CEO Allan Mulally took over last September 2006. The profit is a $1.2 billion turnaround from the third quarter last year, where they also generated $1 billion in cash and paying $2 billion in debts.
Amazing, isn’t it? “Ford is making tremendous progress,” Mulally said on a conference call. “Our transformation is working really well.”
The company has since then become far stronger than its rivals – General Motors and Chrysler, as they have also gained tremendous market share at about 16%. Although they still have a debt-full of load, the estimated $38 billion in debt was reduced to $23 billion presently.
They have made a great leap with their strategy of reducing approximately $4.6 billion in cost this year. Also, they have made tremendous progress with consumers too as they added $100 million to automotive revenue. The bottom line is simple – productivity gains, lower retiree costs and a drop in operational cost all contributed to its emergence.
The real meat though is the $1.9 billion in pretax profit by getting better pricing. CFO Lewis Booth said that their plants have been so disciplines producing only fewer cars to the company doesn’t need to deep down discounts if it cannot be sold.
But a lot of work still needs to be done. Despite a strong quarter, Ford still lost about $1.3 billion this year.
Despite the strong quarter, Ford has still lost $1.3 billion so far this year. But they are becoming liquid with 23.8 billion in cash, up from 2 billion from second quarter. This was partly achieved by issuing 565 million dollars in new stocks for the quarter.