Ford's CEO Alan Mulally might disagree with whoever said "you can't cut your way to profitability." After cutting jobs, cutting salaries, cutting supply complexity and cutting entire divisions, Ford reported a first quarter net profit of $100m. That's a lot better than first quarter last year, when they turned in a deficit of $282m. But wait… The Wall Street Journal reports that FoMoCo earned (pretax) $257m in South America, $739m in Europe and $1m in Asia and Africa. Ford Credit added another $36m to the company's coffers. However, North America — the one region where they made the most cuts– showed a pretax loss of $45m. Just like their RenCen friends, the Blue Oval's North American operation is being kept afloat by their overseas operations. Maybe instead of cutting so much, Ford needs to look at what the other regions are doing right (hint: it begins with "p", ends with "t" and rhymes with "brod muckt"). Meanwhile, expect a glowing second quarter report in July when the cash from the sale of Land Rover and Jaguar hits the books.
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Recent article showed that 64% of GM products were sold outside the US. Wonder what Ford’s % is?
Thank-you, Frank, for a balanced summary of Ford’s Q1 results.
I would repeat that I am impressed that Ford had such a small loss in North America (what is that, like $15 per vehicle sold?) when the market is down 8%. Ford is really starting to get a handle on their fixed costs.
If the housing market comes back in the fall when the new F-150 comes out, Ford may be well positioned. Who’d a thunk it?
That WSJ link doesn’t provide much. I read a longer article that included a forecaast (promise? pledge?) from Mullally as to exactly when Ford NA would be profitable.
That SUV photo – that’s damned ugly. Since this is a rare bit of good news for Ford, could we get a picture of something better looking to go along with it? Or at least post a pic of the Denali XT concept so that the Ford will look good by comparison.
The housing market coming back in the fall is wishful thinking, as is the F-150 regaining the sales volume it once had.
We’re smack dab in the middle of a lame duck presidential year where a new one will be taking over after an 8 year term. We saw similar things happen when Clinton was in his last year, but this time energy prices are considerably higher than when he was in office, not to mention the financial sector really collapsing.
KixStart :
That SUV photo – that’s damned ugly.
I disagree. And I LOVE the way the current Explorer drives. Why Ford stopped promoting this vehicle is beyond me. Surely when sales are tanking they should be advertising it MORE, not less.
Just sayin’.
Ford is showing stability and improvement on a number of fronts.
The market is down but theri market share is nearly stable lately, reliability is markedly improved and the bleeding is greatly reduced.
Kill Merc and sell Volvo and when (not if) the dead cat bounce from one of the others comes Mullaly will look like a genius (shoot, may be he is) and a bargain at twice the price.
I hope soon I can stop refuring to the Debt 3. It will be Ford and the Debt Duo (or Uno, or just a historic footnote, sigh).
Go Big Al!
Bunter
Bunter1:
The market is down but their market share is nearly stable lately,
So there’s stable, nearly stable and nearly stable lately? Not so sure. This from yesterday’s post on the Volvo sale…
“FoMoCo’s market share dropped from 15.1 percent at the end of 2006, to 14.2 percent at the end of 2007, to 13 percent this April.”
For millionth time: clearly the management isn’t stupid. They haven’t changed all that they have at Ford and not understand why NA isn’t keeping up with the EU. They know how to stablize a company, and they know it is ultimately about product. However, unlike blinded enthusiasts, they understand what money/time/resources are needed to get good AND profitable product out there. This management team has only been in place a short time. Starting next year there will be a very quick product cadence unlike anything we’ve seen at Ford in recent memory.
RF –
But as I pointed out in my post yesterday, we don’t even have April numbers yet. How do we know their marketshare? They were stable through Q1 – down like 0.1 point. That’s all we know so far.
When is the new Fiesta due to hit our shores? Not a moment too soon, that’s for sure. It will redefine Ford as a company that can sell a good small car. I drove the new Mondeo diesel in Europe recently…fantastic car. The Flex is something different that I think will really catch on with Americans due to it’s unique design…only in America could a vehicle be so damn long. It has a gangsta appeal, yet the interior will be like a Suburban. Combine Fords better worldwide products and Mulally’s rational leadership, and I think this company will be looking good in a couple years. I bought stock today.
I do hope that they are actually still engineering and designing some vehicles here in the US…my only problem with Ford now is that they are practically cutting away all their American jobs and products and replacing them with foreign Fords (Flex-Canada, Edge-Canada, Fusion-Mexico, Fiesta-probably Mexico (via Germany), Transit-Turkey(??)), etc. It seems their only American vehicles are the large trucks. And this is at a time that the collapse of the dollar is making US manufacturing attractive.
At least GM still does employ actual American engineers for their Lambdas, CTS, GMT900’s, and some of their other most successful and best products.
Ford’s presentation shows that in Q1 about 35% of their US volume was fleet sales.
Ford’s retail market share has dropped below Honda.
So, the retail market share ranking is now:
1. GM
2. Toyota
3. Honda
4. Ford
“Meanwhile, expect a glowing second quarter report in July when the cash from the sale of Land Rover and Jaguar hits the books.”
Do you know for a fact that the initial investment in those two companies has already been written off? If not, the sale will causes losses, not gains. When you sell something for less than you paid for it that normally is called a loss, not a gain.
Buy a house for $500k, sell it a few years later for $300k, you lost $200k. The $300k sales price is not a profit.
When you sell something for less than you paid for it that normally is called a loss, not a gain.
That is correct. Cash flow (money received during the course of business) is not the same thing as profit (an event that creates value in excess of cost.)
Jag and Land Rover were sold for less than they paid for it. Ford will post a loss for this, not a gain.
Ford’s presentation shows that in Q1 about 35% of their US volume was fleet sales.
Ford’s retail market share has dropped below Honda.
So, the retail market share ranking is now:
1. GM
2. Toyota
3. Honda
4. Ford
Honda-Acura’s sales through Q1 were 353k. FLM’s were 547k. Ford’s estimated retail was about 357k. Even if Honda is 100% retail (which it isn’t – fleet sales were up 200% last year to about 5% of total sales), FLM is still above Honda.
A cursory glance through the Q1 presentation suggests that a little over 60% of Ford’s sales are outside the U.S. (over 50% outside of NA). But that’s not unexpected in a globalized world. How much of Toyota’s or Honda’s sales are abroad versus their home markets or versus the U.S.?
RobertSD, The Toyota site in Japan can shed some light on that. I forget exactly what to click…
Toyota Worldwide
Oh, wait,
That was easy…
Feb data is the latest, though. Looks like their overseas sales are much bigger than domestic sales but production is fairly close to 50/50.
I guess buying that Fusion wasn’t the worst decision i ever made.
Mind you, I actually really like the car. And I say this after the fact that I agree with what a lot of TTAC has to say.
Its good to see they’re doing something well.
Hopefully they’ll bring over the fantastic Mazda2/Fiesta and start kicking some ass in the sub-compact market (the only legitimate competitor for this car is the Fit Sport).
And now they just need to ditch Volvo.
Still. Need. Falcon.