Ford's upbeat results and cautious outlook

While the auto giant swung to a $2.1 billion profit for the first quarter of 2010  from a loss of $1.43 billion for the same period last year, the stock price of company took a hit together with the rest of the market today.

Underneath the upbeat results is a toned down outlook by both the management and analysts.

As written in "Ford delivers $2.1bn net profit" of Financial Times,

Alan Mulally, chief executive, said that 2010 was “off to a more encouraging start than anticipated”. But he added that “while we are pleased with our momentum, the outlook remains challenging”.

Mr Mulally pointed to excess capacity in key markets and uncertainty surrounding the termination of car-scrappage incentive schemes, especially in Europe.

Lewis Booth, chief financial officer, indicated that quarterly profits were likely to be lower for the rest of the year, partly due to a lower contribution from Ford Credit. But Mr Booth said he was confident of positive operating cash flow.

Although Ford’s bottom line far exceeded analysts’ forecasts, Credit Suisse’s Chris Ceraso expressed disappointment at the $107m pre-tax profit in Europe and the $203m from South America. The first-quarter cash flow of $200m, before subvention payments to Ford Credit, was also weaker than expected.

Despite all the good news, the company remains very debt ridden with $34.3 bn of debt on March 31

Mr Booth told the Financial Times that “we’ve made no secret of the fact we’ve got too much debt.”


But he said that Ford was “making progress”, including a $3bn payment on its revolving credit facility earlier this month. “From here on in, our principal strategy is to improve the business and generate positive operating cash flow,” Mr Booth said