Ford Earns $2.7 Billion Profit in Tumultuous 2009
January 28, 2010
Ford Motor Co. reported Thursday it earned a $2.7-billion profit for 2009, its first profit in four years and during one of the worst years in 
decades for global vehicle sales and auto company profits. The past year’s performance led Ford to boldly declared it plans to be profitable for all of 2010. Ford’s previous plan called for not being profitable until 2011.
“While we still face significant business environment challenges ahead, 2009 was a pivotal year for Ford and the strongest proof yet that our One Ford plan is working and that we are forging a path toward profitable growth by working together as one team, leveraging our global scale,” Ford President and CEO Alan Mulally said in a statement released Thursday morning.
“In every part of the world, we are providing customers with great products, building a stronger business and contributing to a better world,” he added. “Our progress has helped us gain market share in most of our major markets.”
Indeed, Ford’s fortunes have vastly improved largely because the company has tackled the basics: building and selling vehicles buyers want enabling Ford to boost sales and gain market share, commanding higher prices and collecting higher profit margins against the backdrop of a reduced cost structure.
Financial Picture
Ford earned $2.7 billion in net income in 2009, driven in part, Ford said, to favorable pricing on vehicles, reductions in costs, gains in reducing its debt and strong results from its financing arm, Ford Credit.
Ford noted this marks Ford’s first full-year profit since 2005 and a $17.5 billion improvement from 2008, when Ford lost an all-time record $14.6 billion. That loss many analysts to wonder if Ford could avoid a federal bailout or a federally-sponsored bankruptcy as General Motors and Chrysler were forced into last summer.
In the fourth quarter of 2009, Ford earned $868 million. That was on top of a $997-million profit in the third quarter.
Ford’s profit allows the automaker to pay profit-sharing to 43,000 U.S. hourly employees in the amount of about $450 a person. Salaried employees, still not receiving bonuses, will receive merit raises and matching 401(k) funds.
In terms of revenue, Ford is on the upswing. Fourth quarter revenue climbed $6.4 billion from a year ago to $35.4 billion. Revenue for the year was $118.3 billion, down $19.8 billion.
Ford ended the year with $25.5 billion in cash; up from $23.8 billion at the end of the third quarter.
2009: Losing Less, Gaining Share
Except for a fortunate few, including Hyundai, Kia and Subaru, automakers saw sales decline — in most cases significantly — from 2008 to 2009, a year that saw total U.S. sales plummet to 10.4 million from as many as 17 million only a few years ago.
So 2009 became a year when winners were the ones that lost the least. And Ford fell into that category. Ford sales fell 15.6 percent in 2009 from 2008 compared with the industry’s fall of 21 percent. GM dropped 30 percent, Chrysler fell 36 percent and even Toyota and Honda’s decreased roughly 20 percent.
That kept Ford in the No. 3 spot for U.S. sales. Toyota surpassed Ford in 2007 and has held the No. 2 spot since, behind General Motors. However, Ford halved the gap with Toyota. Ford closed 2009 only 113,261 sales behind Toyota. At the same time, Ford stayed about a half-million units ahead of its next nearest competitor, now Honda, which supplanted Chrysler in 2009 for the No. 3 spot.
“That means Ford is catching up with GM and Toyota,” noted Edmunds.com analyst Ivan Drury.
As a result of losing less, Ford gained U.S. market share for the first time since 1995. That helped Ford increase its 2009 U.S. market share by 1.1 percentage points to 16% of all cars and trucks.
Enhanced Image
Ford also is achieving what domestic automakers have been trying to do for years – it is beginning to change public perception. As it turned out, Ford got a major boost from the fact that it decided not to seek federal government loans to keep it afloat or to file for bankruptcy.
Ford’s stock – not only its publicly traded stock but also its brand – is on rise. Edmunds.com’s Brand Interest metric, which looks at customer consideration for new models over a four-week period, shows Ford rose to the No. 2 spot as of Jan. 24, moving ahead of Honda and Chevrolet, which were No. 2 and No. 3 in the previous four-week period. Toyota held its No. 1 spot in brand consideration, in the measure taken before Toyota’s much publicized sales shutdown of eight recalled best-selling models. 
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