Mulally: Next phase is growing business
With one more profitable quarter under its belt, 2010 is increasingly looking like Ford's big comeback year. The Dearborn automaker, which launched its turnaround plan in 2006, posted a $1.7-billion third-quarter profit Tuesday and said it is hiring workers and aggressively paying down its debt.
"We are moving from fixing the fundamentals of our business and weathering the downturn to growing the business," Ford President and CEO Alan Mulally said Tuesday.
Ford's year-to-date profit now stands at $6.4 billion -- putting Ford on track for its biggest annual profit since 1998. "The company is better off than it was then," said Shelly Lombard, a credit analyst with Gimme Credit. "It can make money even with industry volume that's much lower ... and with a sales mix that is much less reliant on trucks."
That's especially true in Ford's long-troubled North American division, which has now posted its fifth consecutive profit. U.S. consumers have been willing to pay more for Ford cars because of their exclusive technology and improved quality, now on par with top Asian rivals.
Last year, Ford eked out a small profit of $2.7 billion, which resulted in bonuses for all Ford workers. With this year's profit expected to top $7 billion, they are likely to get annual bonuses next year, which would give metro Detroit's economy a boost.
Ford makes big dents in debt
Ford's ability to pay off big chunks of its debt has the company well on its way toward eliminating the biggest remaining challenge to its turnaround that it can control.
On Tuesday, the Dearborn automaker said it plans to eliminate its remaining debt to a UAW retiree health care trust with a $3.6-billion cash payment Friday. It also said it used $2 billion in cash in September to pay off some of its bank debt.