Ford Motors Co. has posted a $100 million profit for the first quarter financial results of 2008. However, according to company officials the company is still expected to lose money even after such an impressive result, mainly due to the slumping U.S. auto market. But even this speculation doesn’t overshadow the fact that the company’s stocks showed a 12% rise in the first quarter and it has also posted revenues worth $43.5 billion.

Since the second quarter of 2007, Ford hadn’t had the chance to post a profit and that too of such high numbers. However, the most notable fact of this quarter’s results is that the profits have come at a time, when U.S. Buyers are avoiding auto purchases amid the current economic crisis. Since the slump in the economy, Ford’ s sales have gone down by almost 9%, especially in the trucks and sport utility vehicles (SUVs) categories. Inspite of this fall, Ford claims that it has managed to earn sufficient revenues due to the sales in Europe and South America.

According to company CEO Alan Mulally, “The underlying business is improving. We remain cautiously optimistic despite the external difficulties.” Still there is a deeper problem for the Ford management, which has been haunting them for quite some time now. For the year 2007, Ford has posted an annual loss of $2.7 billion. This massive dent in company revenues, forced Ford to mortgage its assets just to stay in business. Now the question is whether Ford would be able to finish restructuring, before the company runs out of cash? Alan Mulally is confident that Ford will be able to compensate for last year’s losses even with the incredibly slow economy. Still, Ford admits that North American market is something they are very concerned about, as this could be the factor that could put a dent in Ford’s plans.

Ford had predicted an annual sale of its light vehicles in the U.S at 15.7 million cars. However, with growing economic concerns it has reduced that estimate between 15 and 15.3 million vehicle sales for the entire year. Ford has also come down on its estimates on North American sales to 101,000 vehicles for the year 2008.

Ford’s Chief Financial Officer (CFO) assured that after completing the financial formalities, Ford would still be left with a substantial amount of cash. As on March 21^st 2008, Ford had $28.7 billion in cash on hand and $11.9 billion in credit lines. Its total liquidity was estimated at $40.6 billion. Ford is planning to use an estimated $12 billion to $14 billion throughout the year 2009 to cover its losses and finish the restructuring project.

This entry was posted on Thursday, May 15th, 2008 at 1:37 pm and is filed under Industry News. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.