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Ford benefits from avoiding bankruptcy, slashing costs

July 28, 2010

By Jim Hagerty
Staff Writer

As Ford Motor Co. remains the only of Detroit’s Big Three to avoid bankruptcy, its cost-slashing efforts continue to pay off. Ford reported a second-quarter net income of $2.6 billion, the company announced last week.

Ford surpassed predicted stock efforts of 40 cents per share, as its share reached 61 cents last week while company revenue reached $31 billion, up from its $26.8 billion a year ago.

After the first leg of the recession, Ford’s outlook toggled between stable and bleak. However, it has emerged as an industry benchmark, which analysts now say honestly reflects a possible soar in U.S. car sales in the near future.

Increasing its U.S. market share to 17 percent, surpassing Toyota, Chrysler and Honda, the automaker has posted its largest domestic grasp in more than three decades.

According to a Morningstar.com report, Ford could be spearheading an industry rebound in spite of Wall Street predictions of a another automaker skid.

“A healthy U.S. business is critical for Ford because North America is 43 percent of total revenue and a big reason the firm has turned itself around since the auto business burned more than $14 billion in cash in the second half of 2008,” the Morningstar report said.

Wall Street analysts said last week Ford’s growth in Japan and South America may offset waves of U.S. sales likely to be felt for the remainder of the year into 2011.

Announcing the end its Mercury line, Ford’s Fusion Hybrid sales are up by more than 30 percent, and the company has continued to broaden the Lincoln brand. Ford, however, is still carrying a considerable debt load, even as it chips away at labor costs. Still facing approximately $26 million in debt, cost-cutting efforts have slashed the load by more than $7 million since the beginning of the year.

From the July 28-Aug 3, 2010 issue

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