Ford turns a profit!
You wouldn’t believe it but Ford has posted a quarterly profit of $100 Million for the first quarter of 2008. While the automaker has struggled with keeping up on pension programs and the weight they put on the price of automobiles finally good news and profits are coming out of the company. Ford still expects to lose money for the full year but spouts that it should return to profitability in 2009.
Strong profits in Europe and South America followed a weakening dollar and improved the overseas division. Back at home though, Ford struggled to sell its extensive line of “gas-guzzlers” and large trucks to consumers as sales were down 9% year over year. The weakening US sales were easily overwritten by foreign sales however.
Ford managed to lose just $45 Million in its North American producers. Compared to a $600 Billion loss just a year ago, the company is doing much to limit costs and keep price per automobile as low as possible. Alan Mulally, the CEO of Ford has done a lot to help Ford’s cash problems.
The new CEO Alan Mulally who was known for his cost cutting abilities at Boeing during a time of slowdown has done the same with Ford. Ford’s costs have been cut by $3.3 Billion since 2005 when Mulally took over, his ability to cut costs has certainly extended the life of the automaker and given it new hope that it might make it out of its precarious position. Ford has lost much of its ability to finance itself, instead it has turned to the dangerous decision to mortgage its assets to raise cash. Some worry that Ford might not be able to make it out of its cash flow issues before the company exhausts it’s borrowing possibilities. The company has enough cash to hold itself through 2009 and onward, with over $40 Billion in cash and credit that can tide the automaker over.
For the short term trader, this news means very little. Ford is now selling at levels it hasn’t seen since fall of 2007. At this point its anyone’s game, but its going to be hard to get past this nasty resistance level.
