Strong US sales helps Ford report best first-quarter profit in 13 years

FORD has reported its best first-quarter profit in 13 years, driven by strong sales in its home market and demand for more fuel-efficient vehicles.

The company also said yesterday that last month’s earthquake which has hurt the supply chain in Japan has had “minimal” impact on its business. Analysts said Ford may even stand to gain.

“Ford continues to get market share. We expect this trend will continue,” said Channing Smith, co-manager of Capital Advisors Growth Fund. “I think Ford and a lot of the other American automakers will take market share from the Japanese.”

Ford is the first US automaker to report earnings since the March earthquake in Japan jolted the global supply chain especially for Japanese makers.

While Japanese automakers Toyota and Honda have said they expect deep cuts in production this year, Ford said its business will not be greatly affected.

Net income rose to $2.55 billion (€1.74bn), or 61 cents a share, compared with $2.09bn, or 50 cents a share, in the year earlier period. It was the highest first-quarter net income since 1998.

Ford beat quarterly earnings expectations by 12 cents a share, which helped send the company’s shares up 3.5% to $16.09 in trading before the market opened. Its fourth-quarter 2010 results missed analyst expectations by a wide mark, ending a string of quarters in which Ford easily exceeded expectations.

Ford maintained its projections for North American production in the second quarter at 710,000 vehicles. For the first time, Ford disclosed its projected second-quarter global production figure of 1.46 million.

Revenue rose to $33.1bn from $28.1bn last year. Analysts had expected $29.7bn.

Alan Mulally, who took over as chief executive in 2006, has turned the company around since it lost $30bn from 2006 to 2008 by streamlining business operations including design, production and management of its balance sheet.

Lewis Booth, chief financial officer, pointed to Ford’s pricing discipline in turning in what he called “fantastic” quarter.

“As we build what we can sell, we’re not chasing marginal, unprofitable share. We’re staying very disciplined on incentives,” he told reporters yesterday.

Ford stands to gain US market share as it can take advantage of the recent redesign of its Fiesta and Focus models just as petrol prices spike and Japan’s automakers, which have dominated the US small-car market for decades, expect thin inventories in May and June, analysts said.

Ford said that higher commodity costs including oil prices may provide a headwind to growth for the rest of the year.