DEARBORN, Mich. — Ford Motor Company and Ford Motor Credit both reported second-quarter profits last week, improving on the results from the year-ago period..
Ford Motor reported second quarter 2010 net income of $2.6 billion, a $338 million improvement from the year-ago period, as each of its major business operations around the world recorded improved profits.
Excluding special items, Ford reported a pre-tax operating profit of $2.9 billion, an improvement of $3.5 billion from the year-ago period and a $932 million improvement from the prior quarter.
This was the company’s best quarterly performance since the first quarter of 2004. Ford has posted an automotive and total company pre-tax operating profit for four consecutive quarters.
Ford North America posted a second quarter pre-tax operating profit of $1.9 billion, a $2.8 billion improvement from second quarter 2009.
Meanwhile, Ford Credit reported net income of $556 million in the second quarter of 2010, an increase of $143 million from earnings of $413 million a year earlier.
On a pre-tax basis, the captive lender earned $888 million in the second quarter, compared with $646 million in the previous year. On a pre-tax basis, the company earned $1.7 billion in the first half of 2010, compared with $610 million in the first half of 2009.
The captive lender said the increase in pre-tax earnings was because of a lower provision for credit losses and lower depreciation expense for leased vehicles due to higher auction values.
“Economic indicators are mixed, but overall continue to trend upward,” Chairman and CEO Mike Bannister said. “More favorable external conditions, combined with our own strong and consistent originations and servicing practices, continued to drive positive results in the second quarter. We are anticipating strong results for the full year.”
Ford Credit also reported contract volume of 181,000 in the U.S. for the second quarter, up from 153,000 in the year-ago period. For the first half of the year, contract volume reached 356,000 in the U.S., up from 288,000 in the year-ago period.
On June 30, 2010, the captive lender’s on-balance sheet net receivables totaled $85 billion, compared with $93 billion at year-end 2009. Managed receivables were $87 billion on June 30, 2010, down from $95 billion on December 31, 2009. The lower receivables primarily reflected the transition of Jaguar, Land Rover, Mazda, and Volvo financing to other finance providers, lower industry and financing volumes in 2009 and 2010 compared with prior years, and changes in currency exchange rates.
Ford Credit said it expects full year 2010 profits to be higher than its 2009 profits. The second half of 2010 will be lower than the first half because the company expects smaller improvements in the provision for credit losses and depreciation expense for leased vehicles compared with the improvements during the first half.