Ford Motor forfeited even the company's famous logo to avoid the collapse that landed General Motors and Chrysler in bankruptcy. But if Ford keeps generating results like it did in the second quarter, problem may decrease.
Ford posted a $2.8 billion net profit as it lured car buyers to pay higher prices for its newest models. It was Ford's fifth straight profitable quarter. Revenues were $31.3 billion, up more than 30 % from the same period a year ago.
Chief Executive Alan Mulally said that the company is much ahead of what it was after the first half and hopes for better results in 2011.
The best news was that Ford's automotive operations generated $2.6 billion and the company retired $7 billion worth of debt, lowering its annualized interest costs by $470 million.
Ford hit mid-year with $21.9 billion and $27.3 million in automotive debt, leaving it with a net automotive debt of $5.4 billion. Ford said it expects to have more cash than debt by the end of 2011.
Bond analyst Shelley Lombard of GimmeCredit said that Ford has more operating momentum because of its debt being three times bigger than General Motors, which scrubbed its balance sheet clean in bankruptcy.
Ford is boosting profit by reducing discounts and selling new models like the Taurus sedan and Fiesta subcompact with more expensive features like Ford's Sync voice-activated phone and stereo system. Buyers paid an average of $30,322 for Ford cars and trucks in the quarter, about $2,000 more than they did a year ago, according to automotive research firm Edmunds.com.
Ford cautioned that the second half of 2010 won't be as profitable as the first half because costs are expected to rise by $1 billion to support new model launches, increased production and new investments. Ford will begin selling a redesigned Explorer sport-utility and Focus compact later this year, along with an electric version of its Transit Connect compact van.
Ford predicts U.S. auto sales will be about 11.5 to 12 million vehicles in 2010.