from the Wall Street Journal
Ford Motor Co. has weathered the car industry's downturn better than many competitors. Now some analysts think the company has turned the corner so far it could report break-even results for its core North American operations or even an overall profit when it releases third-quarter earnings Nov. 2.
At the heart of Ford's relative success has been its ability to minimize its year-over-year sales declines while taking advantage of its competitors' weakness and grabbing market share.
According to CNW Marketing Research, Ford gained more than five percentage points of U.S. retail market share in the third quarter compared with the same period of 2008, while Detroit rivals General Motors Co. and Chrysler Group LLC lost ground.
"The Ford story is that they have taken advantage of the fact that they were sole domestic brand not to take a government bailout and not to file for bankruptcy," said Efraim Levy, an auto-industry stock analyst at Standard & Poor's. "But those benefits will fade in 2010 as the weaker competitors distance themselves from the bankruptcy filings and start to introduce some fresh product."
In the past week, several Wall Street analysts expressed optimism that Ford's North American operations could break even in the third quarter—a significant achievement after several years of steep losses—though they still expect the company to post a loss for its operations overall. One analyst, J.P. Morgan's Himanshu Patel, even forecast a quarterly profit overall at Ford.
"Obviously, I'm very pleased with the progress that we're making all around the world, and our market share is going up in every major market," Ford Executive Chairman William Clay Ford Jr. told reporters last week. "And our products are being very well received." He declined to discuss earnings, citing the quiet period before their release.
Ford continues to benefit from stronger prices for both its new and used cars that should boost results at its wholly owned financing arm, Ford Motor Credit. The trend could help the company reverse large losses accounted for in 2008 at the unit based on anticipated declines in the value of its leased vehicles.
Another positive sign could come in a report expected to be released soon by auto guide Kelly Blue Book. Two Ford vehicles will appear on the list of 2010 model-year vehicles projected to retain the greatest amount of their original retail price after five years of ownership, said a person familiar with the matter. Last year, no Ford car or truck held a spot on the 2009 model-year list.
Ford also is expected to perform well in the influential annual auto-reliability survey by Consumer Reports, due out Tuesday.
In the second quarter, the car maker reported a profit of $2.3 billion, though that came mainly from gains it recorded as part of efforts to restructure its debt. Excluding the gains, Ford would have reported a loss of $424 million, still narrower than a comparable loss of $1.03 billion a year earlier and much better than analysts had expected. The company has lost more than $30 billion since 2006.
The improved results have helped build Chief Executive Alan Mulally's image as a turnaround leader. But Ford still carries a massive debt after borrowed $23.5 billion in 2006 to fund its restructuring. Many on Wall Street are waiting to see how Ford will cut its debt load.
Despite an improved outlook, Ford hasn't revised its profitability forecast, stating the company won't break even or make money until 2011.
A person familiar with the matter at Ford said that even if encouraging signs continue to emerge, Ford may stay conservative about how quickly it can return to sustained moneymaking.
At the heart of Ford's relative success has been its ability to minimize its year-over-year sales declines while taking advantage of its competitors' weakness and grabbing market share.
According to CNW Marketing Research, Ford gained more than five percentage points of U.S. retail market share in the third quarter compared with the same period of 2008, while Detroit rivals General Motors Co. and Chrysler Group LLC lost ground.
"The Ford story is that they have taken advantage of the fact that they were sole domestic brand not to take a government bailout and not to file for bankruptcy," said Efraim Levy, an auto-industry stock analyst at Standard & Poor's. "But those benefits will fade in 2010 as the weaker competitors distance themselves from the bankruptcy filings and start to introduce some fresh product."
In the past week, several Wall Street analysts expressed optimism that Ford's North American operations could break even in the third quarter—a significant achievement after several years of steep losses—though they still expect the company to post a loss for its operations overall. One analyst, J.P. Morgan's Himanshu Patel, even forecast a quarterly profit overall at Ford.
"Obviously, I'm very pleased with the progress that we're making all around the world, and our market share is going up in every major market," Ford Executive Chairman William Clay Ford Jr. told reporters last week. "And our products are being very well received." He declined to discuss earnings, citing the quiet period before their release.
Ford continues to benefit from stronger prices for both its new and used cars that should boost results at its wholly owned financing arm, Ford Motor Credit. The trend could help the company reverse large losses accounted for in 2008 at the unit based on anticipated declines in the value of its leased vehicles.
Another positive sign could come in a report expected to be released soon by auto guide Kelly Blue Book. Two Ford vehicles will appear on the list of 2010 model-year vehicles projected to retain the greatest amount of their original retail price after five years of ownership, said a person familiar with the matter. Last year, no Ford car or truck held a spot on the 2009 model-year list.
Ford also is expected to perform well in the influential annual auto-reliability survey by Consumer Reports, due out Tuesday.
In the second quarter, the car maker reported a profit of $2.3 billion, though that came mainly from gains it recorded as part of efforts to restructure its debt. Excluding the gains, Ford would have reported a loss of $424 million, still narrower than a comparable loss of $1.03 billion a year earlier and much better than analysts had expected. The company has lost more than $30 billion since 2006.
The improved results have helped build Chief Executive Alan Mulally's image as a turnaround leader. But Ford still carries a massive debt after borrowed $23.5 billion in 2006 to fund its restructuring. Many on Wall Street are waiting to see how Ford will cut its debt load.
Despite an improved outlook, Ford hasn't revised its profitability forecast, stating the company won't break even or make money until 2011.
A person familiar with the matter at Ford said that even if encouraging signs continue to emerge, Ford may stay conservative about how quickly it can return to sustained moneymaking.
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