Ford Motor Company (NYSE: F) today reported first quarter 2011 net income of $2.6 billion, or 61 cents per share, an increase of $466 million, or 11 cents per share, from first quarter 2010 as the global auto industry continued to slowly improve. Notably, Ford did not change its conservative guidance for 2011 due to ongoing uncertainties in Europe (14.5-15.5m units) and North America (13-13.5m units).
First quarter 2011 pre-tax operating profit was $2.8 billion, or 62 cents per share, an increase of $827 million, or 16 cents per share, from first quarter 2010. This increase included profits in each Automotive segment, led by a strong performance in North America and improvement in the declining European market.
Ford’s Q1 Automotive pre-tax operating profit was $2.1 billion, an increase of $936 million from first quarter 2010. Ford’s Automotive business is benefiting from growth in both volume and per-unit net revenue. Debt was decreased by $2.5 billion to $16.6 billion. As a result of the huge debt, Ford bonds are still rated as junk.
This revenue growth, along with scale benefits from increasing volume, are improving profitability and operating margin – despite higher commodity costs and planned cost increases associated with new products.
As previously announced Ford converted some of what was then $16 billion in outstanding debt to cash or new shares of common stock during the quarter. In so doing, the second largest Detroit automaker took a charge of $61 million against its first quarter earnings.
In the first quarter, Ford’s U.S. market share was 16% – down 0.5% – and European market share was 8.5%, – 0.9% compared to the year earlier period. Asia Pacific, the only automotive growth area in the world saw Ford’s share increase to 2.4% as it wholesaled only 240,000 vehicles. Ford estimates that it lost production of 14,000 vehicles during the quarter as a result of the Japan earthquake and tsunami. Since it is a minor player in Asia-Pacific Ford estimates that ongoing production disruptions will not materially affect its results.
First quarter Ford Credit pre-tax operating profit was $713 million, a decrease of $115 million from first quarter 2010, consistent with previous guidance.
North America posted a first quarter pre-tax operating profit of $1.8 billion, a $591 million increase from first quarter 2010. Europe reported a first quarter pre-tax operating profit of $293 million, an increase of $186 million from first quarter 2010. South America and Asia Pacific Africa also posted increased pre-tax operating profits.
Ford’s first quarter revenue was $33.1 billion, an increase of $5 billion from first quarter 2010.
Ford generated positive Automotive operating-related cash flow of $2.2 billion in the first quarter, an improvement of $2.3 billion from first quarter 2010.
Ford has not paid dividends on common stock or Class B stock since the third quarter of 2006. Furthermore, its senior secured credit facility contains a covenant restricting Ford from paying dividends (other than dividends payable solely in stock) on common stock and Class B stock.
Ford By Region
North America – In the first quarter, North America reported a pre-tax operating profit of $1.8 billion, compared with a profit of $1.2 billion a year ago. The increase reflects favorable volume and mix and favorable net pricing. These were offset partially by higher contribution costs, primarily material costs to support new products, as well as increases for commodities, warranty, and freight and duty. Other costs, primarily structural, to support higher volumes and new product launches, also increased. Revenue in the first quarter was $17.9 billion, up $3.8 billion from a year ago.
South America – In the first quarter, South America reported a pre-tax operating profit of $210 million, compared with a profit of $203 million a year ago. The increase reflects favorable net pricing and volume and mix, offset largely by higher costs and unfavorable exchange. Revenue in the first quarter was $2.3 billion, up $300 million from a year ago.
Europe – In the first quarter, Europe reported a pre-tax operating profit of $293 million, compared with a profit of $107 million a year ago. The increase was more than explained by favorable net pricing, favorable volume and mix, favorable exchange and higher subsidiary profits. Revenue in the first quarter was $8.7 billion, up $1 billion from a year ago.
Asia Pacific Africa – In the first quarter, Asia Pacific Africa reported a pre-tax operating profit of $33 million, compared with a profit of $23 million a year ago. The increase is more than explained by lower contribution costs. Revenue in the first quarter, which excludes sales at unconsolidated China joint ventures, was $2.1 billion, up $500 million from a year ago.