Debt cut helps Ford to surprise earnings

• Source: Shanghai Daily
• [07:56 July 24 2009]
• Comments

By Kimberly S. Johnson 

Ford Motor Co posted a surprise second-quarter profit of $2.8 billion yesterday, due to income related to a reduction of debt.

The nation's second-largest auto maker said it earned 69 US cents a share, compared with a loss of $8.7 billion, or $3.89 a share, for the same quarter a year ago. That quarter was the worst in Ford's history.

Excluding special items, including the debt reduction, Dearborn, Michigan-based Ford would have lost $424 million, or 21 cents a share, far surpassing analysts' expectations. Analysts polled by Thomson Reuters expected a per share loss of 50 cents on revenue of $24.7 billion.

The second-quarter profit came because of a US$3.4 billion gain due to debt reduction. In March Ford swapped stock and cash to reduce its loan and bond debt by $7.7 billion. The company has cut its debt by $10.1 billion this year, and is likely to take additional action this year to further cut debt and raise cash.

Ford spent $1 billion more in cash than it earned in the quarter, versus $1.4 billion in the first quarter.

Revenue was $27.2 billion, $11 billion less than the same quarter a year ago.