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2011: Ford's second most profitable year in history

By Catholic Online (NEWS CONSORTIUM)
January 27th, 2012
Catholic Online (www.catholic.org)

In a year of economic downturn and disappointments, Ford reported its second greatest year in its 109-year-old history. It didn't top its earnings that were recorded in 1998. However, a net income of $20.2 billion is still highly substantial, making 2011 a very good year for the U.S. auto maker mainstay.

LOS ANGELES, CA (Catholic Online) - A majority of the profit was attributed to a non-cash gain, as it put a large tax credit from past losses on its balance sheet, shielding it from taxes in the future. Without the credit, the automaker posted full-year and quarterly earnings that fell short of last year's profit as well as analysts' forecasts.

Shares of Ford fell as much as 7.4 percent in early trading on the earnings miss before recouping about half the lost ground after assurances on an investors' call about earnings guidance moving forward. Shares were down 3.1 percent in midday trading.

Still, Ford's net income of $20.2 billion was far up from $6.6 billion in 2010, was the best since 1998, when it received a large one-time gain from the sale of The Associates financial unit.

Ford reported an operating income of $6.1 billion, or $1.51 a share, down from the $7.6 billion, or $1.91 a share, it earned on that basis in 2010.

Pretax earnings for the quarter and full year improved in Ford's home North American market due to increases in both the pricing and the volume of vehicles sold. The company's profit margin in the region also moved upward.

The results mean that the 41,600 members of the United Auto Workers union will be getting larger profit-sharing payments for 2011. Full-year payments to the factory workers will average $6,200, up from $5,000 in 2010.

The company announced that its white-collar workers would get both bonus payments and merit raises for 2011, the first time in four years they've received both.

However -- profit fell in Ford's South American unit and the quarterly loss increased in Europe. The Asia-Pacific region tipped from a fourth-quarter profit a year earlier to a loss this time due to the flooding, but the company had already warned of that loss.

Ford CEO Lewis Booth said that the accounting gain was significant for the company because it was a sign that the company is back to making regular profits. Ford had stopped booking the tax credits back in 2006, in spite of losses at that time, due to doubts that Ford would once again be able to make the kind of profits that would allow it to use those credits.

CEO Alan Mulally said he considered the results to be strong. He noted that Ford missed its financial targets in the quarter due to external factors outside of North America, such as the economic slowdown in Europe and flooding in Thailand that shut factories and affected its supply chain.

Mulally said the company expects Ford's overall pre-tax operating profit in 2012 to be roughly the same as last year, as better auto profits will be offset by lower earnings from its finance arm.

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