Ford CEO says 2010 will be "solidly" profitable
11:26 AM PDT, May 13, 2010
Ford's chief executive told shareholders that the second-largest U.S. automaker will see "continuing improvement" into 2011 but wouldn't say when the company might reinstate a dividend.
Mulally also said the company expects to be "solidly profitable" in 2010, a prediction that was first issued two weeks ago. Before that, Ford had said it didn't expect solid profits until 2011.
Mulally's predictions follow four straight profitable quarters for Ford, which has rebounded better than most rivals from a historic plunge in auto sales during the recession. Ford posted staggering losses in 2008 and early 2009.
Mulally said an improving economy will help the automaker this year and next. It will also get a boost from the release of new products this year, such as the Focus subcompact in the United States.
"Ford has the right plan to lead us through the near-term economic and operating pressures, and continue to deliver profitable growth," he said.
The automaker has seized market share from rivals General Motors Co. and Toyota Motor Corp. in the past year, with well-reviewed new models and consumer goodwill because Ford didn't take federal bailout money as GM and Chrysler Group LLC did. Toyota also has been weakened by a series of safety recalls.
But there are no clear plans to reinstate a dividend despite recent profits. Ford last paid a quarterly dividend in 2006. Executives said they are focused on shoring up the company's balance sheet.
"It is the very early days in our recovery. We still have a lot of debt," said Executive Chairman Bill Ford Jr., the great-grandson of company founder Henry Ford.
Ford's debt totaled $34 billion at the end of the first quarter -- putting it at a disadvantage to GM and Chrysler, which shed much of their debt in bankruptcy court last year.
Bill Ford acknowledged that competitors enjoy a lower cost of credit, but he did not envy that they were propped up by government bailout money.
Asked whether Ford risks becoming complacent, Bill Ford said that the current recovery is different from past ones. Instead of trying to drive up sales of existing cars and trucks, Ford has rebounded through deep restructuring and development of new products.
"The fact that we were able to make money last year in the worst car market in 18 years shows that this is different," he said.
The chairman also said the company would like Mulally to stay "as long as he wants" in response to a shareholder question about whether the CEO will retire.
Mulally, 64, has led Ford since 2006, seeing it through the industry's downturn and the current recovery in auto sales.
Ford faced questions over its investments with Goldman Sachs following government fraud charges against the bank over its packaging of mortgage securities.
Lewis Booth, Ford's chief financial officer, said Goldman accounts for less than 20 percent of Ford's investment banking business.
Shareholders rejected a proposal that considered changes to the company's two-tier share structure, which gives the Ford family control of the automaker through nearly 71 million Class B shares. Twenty-nine percent of shareholders voted for the proposal, up from 19.5 percent who voted for the same proposal last year.
Ford shares rose 2 cents to $12.70 in early afternoon trading.
Finally, Bill Ford said there were no specific plans to reintroduce a dividend, saying the company was focused on strengthening its balance sheet first.
11:26 AM PDT, May 13, 2010
Ford's chief executive told shareholders that the second-largest U.S. automaker will see "continuing improvement" into 2011 but wouldn't say when the company might reinstate a dividend.
Mulally also said the company expects to be "solidly profitable" in 2010, a prediction that was first issued two weeks ago. Before that, Ford had said it didn't expect solid profits until 2011.
Mulally's predictions follow four straight profitable quarters for Ford, which has rebounded better than most rivals from a historic plunge in auto sales during the recession. Ford posted staggering losses in 2008 and early 2009.
Mulally said an improving economy will help the automaker this year and next. It will also get a boost from the release of new products this year, such as the Focus subcompact in the United States.
"Ford has the right plan to lead us through the near-term economic and operating pressures, and continue to deliver profitable growth," he said.
The automaker has seized market share from rivals General Motors Co. and Toyota Motor Corp. in the past year, with well-reviewed new models and consumer goodwill because Ford didn't take federal bailout money as GM and Chrysler Group LLC did. Toyota also has been weakened by a series of safety recalls.
But there are no clear plans to reinstate a dividend despite recent profits. Ford last paid a quarterly dividend in 2006. Executives said they are focused on shoring up the company's balance sheet.
"It is the very early days in our recovery. We still have a lot of debt," said Executive Chairman Bill Ford Jr., the great-grandson of company founder Henry Ford.
Ford's debt totaled $34 billion at the end of the first quarter -- putting it at a disadvantage to GM and Chrysler, which shed much of their debt in bankruptcy court last year.
Bill Ford acknowledged that competitors enjoy a lower cost of credit, but he did not envy that they were propped up by government bailout money.
Asked whether Ford risks becoming complacent, Bill Ford said that the current recovery is different from past ones. Instead of trying to drive up sales of existing cars and trucks, Ford has rebounded through deep restructuring and development of new products.
"The fact that we were able to make money last year in the worst car market in 18 years shows that this is different," he said.
The chairman also said the company would like Mulally to stay "as long as he wants" in response to a shareholder question about whether the CEO will retire.
Mulally, 64, has led Ford since 2006, seeing it through the industry's downturn and the current recovery in auto sales.
Ford faced questions over its investments with Goldman Sachs following government fraud charges against the bank over its packaging of mortgage securities.
Lewis Booth, Ford's chief financial officer, said Goldman accounts for less than 20 percent of Ford's investment banking business.
Shareholders rejected a proposal that considered changes to the company's two-tier share structure, which gives the Ford family control of the automaker through nearly 71 million Class B shares. Twenty-nine percent of shareholders voted for the proposal, up from 19.5 percent who voted for the same proposal last year.
Ford shares rose 2 cents to $12.70 in early afternoon trading.
Finally, Bill Ford said there were no specific plans to reintroduce a dividend, saying the company was focused on strengthening its balance sheet first.
