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Ford Expects Record Profits; GM Sees Own Earnings Growth

Makers increase returns to shareholders; GM boosts stock buyback program.

by on Jan.13, 2016

Ford CEO Mark Fields showing off a new piece of technology at CES last week.

Investors take notice: while the stock market hasn’t been kind to the auto industry in recent weeks – or just about anyone else, for that matter – Detroit’s two largest carmakers are making some upbeat projections for 2016 that could make nervous shareholders happy.

Ford Motor Co. now expects to close the books on 2015 with a record pre-tax profit, with 2016 numbers to be “equal to or higher.” And GM is boosting its own earnings outlook for 2016. Both companies now plan to up their cash payouts to shareholders, while GM is expanding its ongoing stock buyback program.

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“This pattern of strong returns gives us a great platform to build on as we enter the year with a focus on strengthening our core business and engaging aggressively in emerging opportunities through Ford Smart Mobility,” said Ford CEO Mark Fields, in a statement detailing Ford’s forecast.

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Ford Adding 2,200 New Salaried Jobs

The “direct result” of the One Ford plan, says new president.

by on Jan.11, 2013

Joe Hinrichs became Ford's new President of the Americas last month.

Ford Motor Company plans to hire 2,200 salaried workers in the U.S. this year – the largest increase in new salaried workers in more than a decade.

The move comes a day after the market announced it would double its quarterly dividend in recognition of its improving financial condition. The maker yielded a more than 11% profit margin for the first nine months in its core North American operations.

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After years of deep cuts, the auto industry has been among the most aggressive sectors of the economy when it comes to adding jobs over the last several years, Ford’s announcement coming a day after both Honda and General Motors announced significant plans to recruit more blue and white-collar workers of their own.

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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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Big Payday for Ford’s Mulally

Exec lands $29.5 mil in pay – after $58.3 mil stock package.

by on Mar.30, 2012

Ford CEO Alan Mulally at a Paris news conference.

The turnaround at Ford may not be playing out quite as fast as shareholders would like but it’s certainly delivering for CEO Alan Mulally, who landed a $29.5 million compensation package for 2011, the maker has revealed.

That’s more than double what the number two Detroit maker gave Ford family heir and company CEO Bill Ford in the form of pay and bonuses.  And Mulally’s big payday follows the announcement earlier this month that the former Boeing executive had received $58.3 million as part of a long-term incentive package.

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Few executives in the auto industry have received more kudos than Mulally, who is credited with initiating many of the critical steps needed to not only revive Ford Motor Co. but also help it sidestep the bankruptcy-and-bailout route taken by its cross town rivals, General Motors and Chrysler, in 2009.

Nonetheless, there has been at least some pushback.

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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.

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Ford Posts $1.65 Bil Earnings for 3Q

Carmaker’s 10th consecutive quarter in the black.

by on Oct.26, 2011

Ford overcame some headwinds, according to CEO Alan Mulally, with its 3Q profit.

Barely a week after getting union approval for a new 4-year contract that should ultimately reduce its labor costs, Ford Motor Co. announced a $1.65 billion net profit, or 41 cents a share, for the third quarter of 2011.  It marks the Detroit carmaker’s tenth consecutive quarter in the black.

But the latest numbers marked a slight decline from year-ago earnings, which totaled $1.69 billion.  And the results for the July – September period were down even more sharply from the second quarter of this year, when Ford reported a $2.4 billion net profit.

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But Ford had previously signaled it might have a weaker quarter, reflecting not only the cost of launching new products but also the impact of rising commodity prices.

“We delivered solid results for the third quarter despite an uncertain business environment,” contended CEO Alan Mulally, in a prepared release.

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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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No Plan to Restore Ford Dividend

Recovery still too early, says Mulally.

by on May.13, 2010

Still "too early" to declare victory, says Bill Ford, right, who also hopes to see CEO Alan Mulally, left, stay on past 65.

Warning that it is still “too early” to declare a turnaround, Ford Chairman Bill Ford told shareholders the automaker is not yet ready to restore its dividend.

Nonetheless, Ford CEO Alan Mulally declared that the automaker will be “solidly profitable” this year, and that its recovery is occurring faster than anticipated, during the company’s annual shareholders meeting, in Wilmington, Delaware, today.

“It is very early days in our recovery,” declared William Clay Ford, Jr., explaining why the maker is not ready to restore its once-hefty payout to shareholders.  But he added that a dividend “will be a topic for discussion…if we continue our progress.”

During their presentation to investors, the two executives painted a picture that could best be described as cautious optimism.  While Ford is “clearly on a path now of profitably growing the business,” according to CEO Mulally, Chairman Ford stressed that, “We still have a lot of debt.”

Ford has been struggling to find ways to pay down that debt, including recent moves to convert some of it to equity.

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But the maker has made strong progress on the balance sheet, reporting unexpectedly strong $2.1 billion first-quarter earnings, on top of the $2.7 billion profit from 2009.

On the sales side, the maker has gained 2.2 points of market share in 2010, with U.S. sales rising 32.3%, or nearly double the pace of the overall market.

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