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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.


Ford Offering Buyouts to 98,000 Retirees

Maker hopes to shed 1/3 of U.S. pension liabilities.

by on Jun.01, 2012

While CEO Mulally doesn't appear to be retiring anytime soon, Ford is offering buyouts to as many as 98,000 current retirees.

Shedding debt and liabilities has become one of the key strategies for Ford Motor Co. CEO Alan Mulally, and the maker’s latest move is to offer buyouts to 98,000 salaried and white-collar retirees in an effort to trim by a third Ford’s overall $49 billion in U.S. pension liabilities.

The maker says it does not yet have a clear indication of how many of its retirees will accept the new offer but it needs to take steps to deal with a looming problem that has been weighing down its balance sheet.  On a global basis, Ford’s $74 billion pension liabilities were underfunded by $15.4 billion at the end of last year.

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The program will be rolled out in waves, according to a company official, with offers going out to between 12,000 and 15,000 retirees by the end of the third quarter.  The rest will roll out over the following year, with the offers being made by random selection.


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.”


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.”


Ford Says “Ni Hao” to Chinese Financing

Maker aims to bolster lagging Chinese operations – while lowering U.S. costs.

by on Mar.16, 2012

CEO Mulally turns to China for financial assistance.

Ford Motor Co. is trying something new to bolster operations in China. To help support the company’s strategy in China, Ford has announced it’s selling renminbi (RMB)-denominated bonds for the first time. The issue was aimed at investors in Hong Kong, Singapore and elsewhere outside the United States, with total proceeds of $158 million.

“We are pleased with this transaction and appreciate the actions taken by regulators in China that have opened the RMB capital markets for global issuers like Ford,” said Neil Schloss, Ford vice president and treasurer. “This offering was an opportunity for Ford to fund business operations in China while expanding our global investor base.”

Ford was late to the Chinese market, especially when compared to key competitors such as General Motors and Volkswagen, which now dominate that booming market.  Its challenge is to establish a niche in the market – with the maker putting an emphasis on regions of China just beginning to share the economic boom first seen along the Pacific Coast.


Meanwhile, Ford has succeeded in negotiating a new line of credit in the U.S. on what it says are more favorable terms. Ford went heavily into debt as the recent economic downturn began – a savvy move in hindsight considering what happened to its cash-starved Detroit rivals. But it is now trying to improve its balance sheet without the benefits that GM and Chrysler got through bankruptcy.


Ford Reinstates Dividend

Big payout for CEO Mulally and Ford family.

by on Dec.08, 2011

Ford CEO Alan Mulally will get a big payout now that Ford is restarting its dividend payments.

Investors are showing a restrained reaction to word that Ford Motor Co. will restore its dividend for the first time in five years – a less than desirable outcome for the automaker’s senior management team who’d hoped that the nickel-a-share dividend would help drive up the Ford stock price.

With 4 billion shares of stock outstanding, the restoration of the Ford dividend is a nonetheless significant increase in its quarterly costs, totaling about $800 million annually, or $200 million every three months.  Nonetheless, Ford officials have expressed hope, in recent months, that the restoration of the dividend would be a critical step in their goal of both boosting the maker’s stock – and helping it regain a much-sought investment grade credit rating.

“We have made tremendous progress in reducing debt and generating consistent positive earnings and cash flow,” Executive Chairman Bill Ford said in a press release announcing the dividend payment, which will be issued next March 1.

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The great-grandson of company founder Henry Ford, the automaker’s CEO will pocket $736,500 per quarter for his 14.73 million shares of Ford Motor stock.  That’s on top of the additional dividend he gets for the special Class B shares he and other family members own exclusively.  The Ford family collectively get $979,000 a quarter for that stock, which is already paying a dividend.  CEO Mulally, meanwhile, will get $875,000 for the 17.25 million shares of common stock he currently holds.


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.”


Ford Profits Dip During Q2

Like Chrysler, Ford hit by one-time charges.

by on Jul.26, 2011

One-time charges, including the cost of abandoning the Mercury brand, hit Ford's bottom line.

Ford Motor Co. reported a slight drop in earnings for the second quarter as special, one-time charges – including the abandonment of the Mercury brand — hit the company’s earnings sheet.

Nevertheless, Ford still posted net income of $2.4 billion, or 59 cents per share, an 8% year-over-year decline of $201 million, or 2 cents per share, from second quarter 2010.  But the maker also posted a healthy 13% increase in revenues.

Without the one-time write-offs, Ford would have earned $2.9 billion, or 65 cents a share – slightly ahead of the consensus analyst forecast of 60 cents.

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It was notably the ninth consecutive quarterly profit by Ford, the only domestic automaker to avoid filing for bankruptcy protection during the auto industry’s deep downturn in 2009.  Chrysler, which also reported its second-quarter numbers today, said it went $370 million into the red as the result of one-time charges connected to the payoff of its government bailout loans.  (Click Here for more on Chrysler.)

“We delivered very good second quarter results while growing the business globally and serving more customers in every region,” said Alan Mulally, Ford president and CEO. “Despite an uncertain business environment, we further strengthened our balance sheet and continued to invest for the future.”


Ford Earnings Likely to Be Strong

Analysts forecasting strongest Q1 since 1998.

by on Apr.25, 2011

The emphasis is on "profitable growth," according to Ford CEO Alan Mulally.

It’s been a challenging couple of months for the auto industry.  There’s the near-record run-up in petroleum prices, and the Japanese parts shortage that has crippled makers around the world.  Raw material costs have been soaring.  And the economies of some key auto markets have been in the doldrums.

Yet, you might not even notice if you simply watch Ford Motor Co., industry and financial analysts suggest – forecasting that the maker will tomorrow report its strongest first quarter profit since 1998.

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Earnings are forecast to reach as high as 50 cents a share, a nearly 10% rise from the 46 cents reported for the January – March quarter of 2010.  Net income, according to a consensus of analysts, is expected to reach $2.1 billion, the largest figure for the quarter since Ford generated net income of $17.6 billion in 1998.

Such numbers could help quell concerns about the vitality of the auto industry at a time when investors have been pulling back, anticipating serious problems as fuel prices soar – especially for Detroit makers traditionally dependent upon low-mileage light trucks.


Ford Slashes Debt Another $2.9 Billion

Move could help it get out of "junk" territory.

by on Feb.11, 2011

CEO Alan Mulally continues chipping away at debt.

Ford Motor Co.’s heavy debt load has become a significant drag on the company competitiveness in the minds of many pundits and Wall  Street analysts, tarnishing Ford’s market share gains, quality gains and the success of its new product offensive.

Thus, it wasn’t exactly a surprise Ford elected to dip into its cash reserves this week and announce plans to pay off another $3 billion worth of debt. The move followed similar steps, late in 2010 that let the maker close the year with more cash than debt for the first time in a number of years.

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The latest reduction in debt, scheduled for March 15th, will see Ford redeem for cash trust preferred securities held by Ford Motor Company Capital Trust II, company officials said.

The redemption will result in a $60 million charge against Ford’s first quarter earnings but it will save $190 million in interest expense annually, the maker stressed.