Ford Motor Co. (F:US), which posted record North American profits in 2012’s third quarter, continued to generate strong earnings and cash flow in the fourth quarter, the company’s chief financial officer said.
“We’ve had a wonderful nine months, in terms of profitability, margin and generating very positive operating cash flow,” CFO Bob Shanks told reporters yesterday in Detroit. “We’ll announce full-year results toward the end of this month, but I think the path that we’ve been on will continue.”
For the fourth quarter, Ford will probably report adjusted profit of 26 cents a share, or 28 percent higher than a year earlier, according to the average estimate of 19 analysts surveyed by Bloomberg.
Ford climbed to its highest in 18 months on Jan. 11 after it doubled its quarterly dividend to 10 cents a share and revealed plans to hire 2,200 salaried workers this year. Chief Executive Officer Alan Mulally has led the company to 14 consecutive quarters of net income (F:US). The CEO, 67, boosted margins by selling models such as the Focus small car globally, rather than develop different versions for various regions.
In North America, the Dearborn, Michigan-based company earned $6.47 billion before taxes in 2012’s first nine months, more than it made in the region for all of 2011. North America had an operating profit margin of 11.2 percent during the period in an industry where a 5 percent margin is respectable.
Ford’s strong profit and cash generation gave the company confidence it could double the dividend and not have to cut it even if the auto market turned down, Shanks said.
“As we’re looking out into the future, we’re still expecting to see improvements in our business,” Shanks said. “We believe we can sustain that increase.”
Ford shares have been rising since it announced plans in October to shut three factories in Europe and cut 6,200 employees, or 13 percent of its workforce in that region. Though Ford said it expects to lose $3 billion in Europe in 2012 and 2013, investors reacted positively to Mulally’s plan to restore profits there by mid-decade.
“The Europe restructuring had been a big overhang in terms of people not knowing what we were going to do,” Shanks said. “The clarity around when we expect to cross break even and return to the black, that took a bit of uncertainty away in the minds of some investors.”
Ford fell less than 0.1 percent percent to $13.99 at the close in New York. The shares have gained 8 percent this year after rising 20 percent in 2012.
“The economy is improving, housing and autos are picking up and Europe seems to be somewhat stabilized,” said Gary Bradshaw, a fund manager for Dallas-based Hodges Capital Management, who has about 150,000 Ford shares and says is ready to buy more. “Now is the time to buy Ford, the stock is acting great.”
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