DEARBORN, Mich. — Ford Motor Company today reported first quarter 2011 net income of $2.6 billion, an increase of $466 million from first quarter 2010 as fuel-efficient new products, continued investment in global growth and the strengthening of Ford’s core business boosted results.
“Our team delivered a great quarter, with solid growth and improvements in all regions,” said Alan Mulally, Ford president and CEO. “We continue to accelerate our One Ford plan around the world, delivering on our commitments to serve our global customers with a full family of best-in-class vehicles and deliver profitable growth for all, despite uncertain economic conditions.”
First quarter 2011 pre-tax operating profit was $2.8 billion, an increase of $827 million from the year-ago quarter. Ford said this increase reflects improved profits in each automotive segment, led by a strong performance in North America and solid improvement in Europe.
First quarter automotive pre-tax operating profit was $2.1 billion, an increase of $936 million from first quarter 2010. Ford said its automotive business is benefiting from growth in both volume and per-unit net revenue. This revenue growth, along with scale benefits from increasing volume, are driving improvements in profitability and operating margin despite higher commodity costs and planned cost increases associated with the investments Ford is making in its products, brand and future growth. The profitability improvement also reflects Ford's stronger balance sheet through lower net interest expense.
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 also made significant progress in strengthening its balance sheet, with a net reduction in automotive debt of $2.5 billion in the first quarter, including the redemption of all outstanding Trust Preferred Securities. Ford ended the first quarter with $21.3 billion of automotive gross cash, an increase of $800 million compared to Dec. 31, 2010. Automotive gross cash exceeded debt by $4.7 billion, an improvement of $3.3 billion from year end 2010.
Ford took action to increase overall liquidity, including an additional $1.7 billion of capacity on its secured revolving credit facility, reflecting Ford’s improved credit profile and overall credit conditions. Ford’s automotive liquidity totaled $30.7 billion, an increase of $2.8 billion from year end 2010.
“Our business is improving as we achieve growth in volume and revenue, while maintaining our focus on increasing competitiveness,” said Lewis Booth, Ford executive vice president and chief financial officer. “The quarter was another encouraging step as we invest for an even stronger business for the future.”
Ford Credit Income Drops
Ford Motor Credit Company reported net income of $451 million in the first quarter of 2011, a decrease of $77 million from a year earlier. On a pre-tax basis, Ford Credit earned $713 million in the first quarter, compared with $828 million in the previous year. The decrease in pre-tax earnings is more than explained by lower market valuation adjustments to derivatives and lower receivables volume.
“We had a solid first quarter supported by strong auction values and credit loss performance,” Ford Credit Chairman and CEO Mike Bannister said. “We continue to execute the fundamentals of our business well.”
On March 31, 2011, Ford Credit’s on-balance sheet net receivables totaled $83 billion, compared with $81 billion at year-end 2010. Managed receivables were $85 billion on March 31, 2011, up from $83 billion on Dec. 31, 2010. The higher receivables were primarily due to changes in currency exchange rates.
On March 31, 2011, managed leverage was 7.0 to 1. In the first quarter of 2011, Ford Credit distributed $900 million to its parent.
For full-year 2011, Ford Credit continues to expect to be solidly profitable but at a lower level than in 2010, reflecting primarily the non-recurrence of lower lease depreciation expenses and credit loss reserve reductions of the same magnitude as 2010. At year-end 2011, managed receivables are anticipated to be in the range of $82 billion to $87 billion. Ford Credit expects to pay distributions to its parent of about $3 billion in 2011.