Ford racks up a billion-dollar profit in the 3rd quarter

DEARBORN, Mich. Ford, the only Detroit automaker to dodge direct government aid and bankruptcy court, surprised investors with net income of nearly $1 billion in the third quarter and forecast a "solidly profitable" 2011.

The automaker said yesterday that earnings were fueled by U.S. market-share gains, cost cuts and the Cash for Clunkers program, which drew flocks of buyers to showrooms this summer. Ford's shares rose 53 cents, or 7.6 percent, to $7.53 in afternoon trading.

Ron Kody, president and owner of Richmond Ford Lincoln Mercury, said the Cash for Clunkers provided a big boost, but a good product mix will help Ford maintain its growing market share.

"The key phrase for us is consideration," he said. "If we can just get consumers in the showroom," the product is strong enough to win them over.

The fuel-efficient Ford Focus sedan and Ford Escape, a small SUV, were among the top five sellers under Clunkers. Ford sales climbed 17 percent in August thanks to the program.

Kody said his year-over-year sales were up 43 percent in August.

The latest results signal that Ford's turnaround is on more solid ground. The company lost more than $14.6 billion last year and hasn't posted a full-year profit since 2005. Though it made a profit in the second quarter, that was mainly due to debt reductions that cut its interest payments.

Ford reported third-quarter net income of $997 million, or 29 cents per share. Its profit forecast for 2011 was a step above previous guidance of break-even or better for the year.

Ford's key North American car and truck division posted a pretax profit of $357 million, the division's first quarter in the black since early 2005. Ford cited higher pricing, lower material costs and increased market share for the improvement.

Ford's plan to create demand and get better prices for its products, coupled with cost cuts, gave the company confidence that it will make money in 2011, chief financial officer Lewis Booth said.

Ford also has benefited from consumer goodwill after it declined government bailout money and didn't go into bankruptcy over the summer as GM and Chrysler did. Ford grabbed sales from its rivals, posting the largest increase in market share of any automaker in September. Ford expects an overall gain in U.S. market share in 2009, a feat it hasn't accomplished since 1995.

But Ford still faces obstacles in its turnaround. Yesterday, the United Auto Workers union said its members overwhelmingly rejected a deal that would have brought Ford's labor costs in line with rivals General Motors Corp. and Chrysler LLC.

Seventy percent of production workers and 75 percent of skilled tradesmen such as electricians and pipefitters voted against it. The union said it will not return to the bargaining table.

Rejection of the deal isn't likely to place Ford at an immediate cost disadvantage to its crosstown rivals because savings from the concessions are longer-term, said Gary Chaison, a professor of labor relations at Clark University in Worcester, Mass.

Staff writer Louis Llovio contributed to this report.