DEARBORN, Mich. – Helped by a lightened debt load, Ford Motor Co. posted a surprise second-quarter profit of $2.8 billion Thursday, following the worst loss in company history a year earlier. Shares rose 8 percent.
The net profit ends a string of four straight quarterly losses for the nation's second-largest automaker, which has gained U.S. market share at the expense of crosstown rivals Chrysler Group LLC and General Motors Co., both of which spent time under bankruptcy court supervision. Ford last went into the black in the first quarter of 2008, with net profit of $70 million.
However, excluding its debt reduction and other items, Dearborn, Mich.-based Ford would have reported a quarterly loss, though smaller than Wall Street expected.
Chief Financial Officer Lewis Booth said the improved second-quarter results are a sign that the company's cost cuts and emphasis on new products are paying off. He stuck to Ford's earlier prediction that it would return to annual profitability in 2011.
"We're 18 months away, I guess," he told reporters on Thursday, adding that a full year of profitability hinges on improved auto sales in the U.S. and Europe.
Ford reported second-quarter net income of 69 cents a share, compared with a loss of $8.7 billion, or $3.89 a share, for the same quarter a year ago.
The profit came because of a $3.4 billion gain due to debt reduction. In March Ford swapped stock and cash to reduce its loan and bond debt by $7.7 billion. The company has cut its debt by $10.1 billion for 2009, and is likely to take further steps this year to lower debt and raise cash.
But excluding special items, including the debt reduction, Ford would have lost $424 million, or 21 cents a share. Still, that beat analysts' expectations of a per share loss of 50 cents on revenue of $24.7 billion. Excluding special items, the company lost just over $1 billion in the second quarter of last year.
Ford spent $1 billion more in cash than it earned in the quarter, compared to $1.4 billion in the first quarter of 2009.
Revenue totaled $27.2 billion, $11 billion less than a year earlier.
Ford is predicting a modest improvement in U.S. sales next year to about 12.2 million light vehicles. Sales so far this year have run below an annual rate of 10 million.
The company said it made $1.8 billion in structural cost cuts during the second quarter, with $1.2 billion coming in North America.
"We continue to make really good progress on cost reductions," Booth said.
Ford's shares rose 51 cents, or 8.2 percent, to $6.89 in pre-market trade on Thursday.