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Ford Doubling Quarterly Dividend

Maker hopes to improve share price, debt rating.

by on Jan.10, 2013

Ford is shining a little brighter in investors' eyes.

Ford Motor Co. will take another critical step in its recovery by doubling its shareholder dividend, the maker today announced.  Stockholders of record on January 30, 2013 will receive a 10-cent payout.

The move comes as the maker prepares to announce strong earnings for the final quarter of 2012 – and as its profit margin climbs to an all-time record level. Ford officials are clearly hoping to give a much-needed boost to the company’s stock price, which only recently began gaining momentum after more than a year in the doldrums.

The move also reflects growing optimism among analysts and ratings agencies, several of which recently bumped Ford debt up to investment grade after a decade in junk bond territory.

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“Our ability to double our dividend in one year is a testament to our One Ford plan, which has enabled us to maintain a solid balance sheet, while at the same time growing our business to provide our shareholders with more return on their investments,” said Bob Shanks, chief financial officer, Ford Motor Company.

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With 2nd Debt Upgrade Ford Regains Control of Blue Oval Logo

Maker regains control of logo, brands and factories.

by on May.23, 2012

Back from the pawnbrokers: Ford regains control of the Blue Oval logo and other key assets.

Ford is out of hock, so to speak.  With Moody’s Investor’s Services upgrading the maker’s debt to “investment grade,” the second-largest automaker has done more than just fulfill the key goal of CEO Alan Mulally.  It regains control of assets that include its factories, brand names and trademarks and the familiar Blue Oval logo.

While Ford continued to use them it put those and other assets up as collateral in 2006 to secure $23.5 billion in credit.  That move, approved shortly after Mulally joined Ford from Boeing, where he had been a senior executive, helped the maker avoid the bankruptcy that nearly crushed its cross-town rivals General Motors and Chrysler.

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“The key factor in our considering an investment grade rating for Ford was whether or not the company would be able to sustain its strong performance,” said Moody’s senior vice president Bruce Clark. “We concluded that the improvements Ford has made are likely to be lasting.”

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Junk No More, Ford Regains Its Investment Grade Rating

Fitch moves, but will S&P and Moody’s follow?

by on Apr.24, 2012

Ford CEO Alan Mulally gets one of his wishes fulfilled.

Ford Motor Co. CEO Alan Mulally has reason to celebrate after achieving one of the top goals he set after joining the Detroit automaker more than five years ago; Fitch Ratings boosting the maker’s debt to investment grade status.

Though several other key ratings agencies have yet to weigh in, the move by Fitch signals growing confidence that Ford’s turnaround is sustainable – and helps the maker maintain momentum by, among other things, reducing its debt costs.  It is also expected to boost Ford’s standing in the stock market, the upgrade quickly triggering a sharp jump in Ford’s share price.

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“We are very pleased with today’s decision by Fitch,” said Bob Shanks, Ford’s Chief Financial Officer.  “It is an important proof point of the continued progress the Ford team is making with our One Ford plan.  Moving forward, we will continue to focus on driving profitable growth for all of our stakeholders. In fact, our One Ford plan includes achieving strong investment grade ratings and maintaining investment grade throughout an economic cycle.”

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Ford Gets Another Upgrade

GM also gets a boost in its credit rating.

by on Oct.28, 2011

Ford boss Alan Mulally may soon get his wish for an investment grade credit rating.

Ford Motor Co. is a small step away from achieving one of CEO Alan Mulally’s key goals after the maker received another upgrade in its debt rating from Moody’s Investors Service – the agency also giving an upgrade to industry giant General Motors Corp.

Both makers are now rated at “Ba1,” which is for Mulally one step from seeing Ford regain the investment grade rating it lost in 2005 as its finances began to implode.  Getting the next upgrade would provide a halo for Ford’s stock, which has taken some sharp blows over recent months – but it would also reduce the maker’s borrowing costs substantially.

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The upgrade by Moody’s follows similar actions by its rivals Standard & Poor’s and Fitch, earlier this month.  All three ratings agencies cited the improved financials for both Ford and GM, as well as the latest contracts the makers have negotiated with the United Auto Workers Union.

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Debt Rating on the Rise, Will Ford Restore Dividend?

Maker gets vote of confidence with Fitch credit upgrade.

by on Oct.21, 2011

After an initial bump look for Ford's labor costs to come down, says President Mark Fields.

Editor’s Note: This story has been revised to reflect a subsequent upgrade in Ford’s credit rating by S&P, the agency removing Ford from its CreditWatch.

With a key debt rating agency giving it the thumbs-up – and further hikes anticipated – Ford Motor Co. is signaling it may soon restore its dividend, a move that could, in turn, help revive the maker’s flagging stock price.

With Ford now indicating its new contract with the United Auto Workers Union will actually lower its labor costs, Fitch Ratings bumped the carmaker’s credit rating up a notch to “BB+” on Thursday, S&P taking the same step on Friday while also removing Ford from its CreditWatch.  Those upgrades fall just one step short of reaching the investment grade targeted by Ford CEO Alan Mulally.

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In the past, it had been expected that Ford would wait until getting that investment grade status before restoring the dividend but, during a meeting with investors, Chief Financial Officer Lewis Booth indicated the additional upgrade, “is not an absolute necessity to pay dividends.”

If anything, analysts say such a move would pay big dividends for Ford.  The quarterly payout is a requirement in some investment communities, such as insurance companies and government pension plans, according to Joe Phillippi, chief analyst with AutoTrends Consulting.

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New Settlement Will Increase Ford’s Competitiveness – Yield New Jobs and Investments

Maker hoping it will also trigger a credit rating hike.

by on Oct.04, 2011

The new UAW contract should result in Ford's maintaining the AutoAlliance plant in suburban Detroit which now builds the Ford Mustang and Mazda6. Mazda plans to abandon the plant.

Ford Motor Co. will increase by $16 billion its investment in North America while adding 12,000 new jobs, the maker announced as it confirmed reaching a tentative new contract with the United Auto Workers Union.

While declining to release specific details of the settlement, which was reached in the wee hours of the morning after more than two months of bargaining – and nearly three weeks after the union reached an agreement with General Motors – Ford officials stressed that the new contract will “improve our overall competitiveness.”

Ford is also hoping that, much like the GM agreement, the new contract will be received well by credit rating agencies.  Ford CEO Alan Mulally has made it a top priority to return to investment grade.  S&P last week indicated it would consider an upgrade if the Ford contract appeared similar in its advantages to the settlement won by GM.

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“We believe this agreement,” said Ford EVP John Fleming, “will enable us to increase our overall competitiveness in the United States,” something he underscored by noting the 4-year contract, if ratified, “will also permit us to insource work from Mexico, China, Japan and other parts of the world.”

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Ford Salaried Workers In Line For Bonuses

Maker promises to share the spoils.

by on Mar.30, 2010

Ford is taking steps to reduce debt -- and reward its loyal workforce.

After a three-year wait, more than 20,000 salaried Ford workers are in line to collect bonus pay again – along with a return of merit pay increases.

Though Ford officials caution the maker must hit a number of targets before the money lands in the hands of its employees, even the prospect of bonuses comes as good news for a company that has faced some serious economic challenges in recent years.  But it also underscores the apparent success Ford is having, even as its crosstown rivals struggle after last year’s bankruptcies.

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The exact size of the payout is unclear, and will likely vary from worker to worker.  In 2007, bonuses ran as high as $15,000.

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Ford Ratings Get a Boost

Partially closes a competitive disadvantage.

by on Mar.19, 2010

Ford is still saddled with more debt than its domestic rivals, but a better debt rating helps offset this competitive disadvantage.

Ford Motor Co. comeback drive got another boost this week when Moody Investor Services bumped up the rating on Ford’s outstanding debts. The rating change should reduce Ford’s borrowing costs – a critical matter since while the automaker was able to avoid bankruptcy, last year, it now carries significantly more debt than Chrysler and General Motors, which both used Chapter 11 to wipe out most of their own liabilities.

Ford had no official comment on the upgrade but senior executives, such as chief financial officer Lewis Booth, have been quietly lobbying for the move, which offsets one of the last remaining competitive disadvantages facing Ford.

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Moody’s raised Ford Motor’s senior unsecured debt rating by one notch to B3, which is still six notches into junk status. It also raised the corporate family rating and probability of default rating by a notch to B2, which actually means Ford is less likely to default on its securities, and secured credit facility by a notch to Ba2, placing it two notches into junk.

“Ford clearly has a much more robust and competitive business model that is capable of supporting significant improvement in performance over time,” said Moody’s senior vice president Bruce Clark.

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