DEARBORN — Ford Motor Company [NYSE: F] on Friday reported 2012 first quarter pre-tax operating profit of $2.3 billion, or 39 cents per share, and net income of $1.4 billion, or 35 cents per share, led by strong performance in North America and Ford Credit. Ford has now been profitable on a pre-tax operating basis for 11 consecutive quarters.
“Our team delivered a solid performance during the first quarter, with particularly strong results in North America, despite a challenging global external environment,” said Alan Mulally, Ford president and CEO. “We remain focused on investing for future growth and developing outstanding products with segment-leading quality, fuel efficiency, safety, smart design and value.”
The results compare to 2011 first quarter net income of $2.6 billion, or 61 cents per share, and pre-tax operating profit of $2.8 billion, or 47 cents per share, adjusted for the tax valuation allowance release. Lower wholesale volumes, reflecting in part weaker economic conditions in Europe, contributed to the decline from a year ago.
First quarter 2012 net income was affected by the impact of the higher tax expense compared to a year ago, resulting from the release of the tax valuation allowance in fourth quarter 2011. The increase in non-cash tax expense explains about half of the decrease in net income, with the balance reflecting lower operating results and increased special charges, primarily buyouts of hourly workers in the U.S. as part of the 2011 UAW agreement.
Ford finished the first quarter with Automotive gross cash of $23 billion, compared with $21.3 billion as of March 31, 2011, and $22.9 billion as of Dec. 31, 2011. Ford had total Automotive debt of $13.7 billion as of March 31, 2012, compared with $16.6 billion as of March 31, 2011, and $13.1 billion as of Dec. 31, 2011. Total Automotive liquidity at the end of the first quarter was $32.9 billion, including all available credit lines. This compares to $30.7 billion as of March 31, 2011, and $32.4 billion as of Dec. 31, 2011.
Ford generated positive Automotive operating-related cash flow of $900 million in the first quarter, the eighth consecutive quarter of positive performance. First quarter liquidity actions also included the successful amendment and extension of the company’s revolving credit facility, resulting in commitments of $9 billion through November 2015 and an additional $300 million through November 2013.
As part of the company’s long-term strategy to de-risk its global funded pension plans, Ford announced today that it will offer to about 90,000 eligible U.S. salaried retirees and U.S. salaried former employees the option to receive a voluntary lump-sum pension payment. If an individual elects to receive the lump-sum payment, the company’s pension obligation to the individual will be settled. This is the first time a program of this type and magnitude has been offered by a U.S. company for ongoing pension plans. Payouts will start later this year and will be funded from existing pension plan assets. This is in addition to the lump-sum pension payout option available to U.S. salaried future retirees as of July 1, 2012.
“Continuing to improve the underlying strength of our balance sheet remains a fundamental part of financing the One Ford plan,” said Bob Shanks, Ford executive vice president and chief financial officer. “Providing the option of a lump-sum payment to current salaried U.S. retirees and former employees will reduce our pension obligations and balance sheet volatility.”
