Ford revs up profits in best first quarter since 1998

Ford reported $2.55 billion profit for the first three months of the year "as fuel-efficient new products, continued investment in global growth and the strengthening of Ford's core business boosted results."

It was the eighth consecutive quarterly profit for Ford, the only major US automaker that did not seek a government bailout during the 2008-2009 financial crisis, and the best first-quarter profit since 1998.

However, the automaker cautioned that its profits later in the year "may not be as strong" due to rising commodity costs, seasonal factors that favor the first half of the year, expected lower profits at its finance arm, and "higher investment in costs related to our longer term growth and brand plan."

"We remain on track to deliver continued improvement for full-year pre-tax operating profit," chief executive Alan Mulally said in a conference call.

Rising oil prices will have an impact on global economic growth and the supply shortage resulting from the Japanese quake and tsunami represent a challenge for the automotive industry, Mulally said.

But Ford's investment in fuel-efficient vehicles means it is "really well-positioned to serve our customers" as demand shifts to smaller cars, Mulally said.

The supply shortages have not had a "material impact" on Ford's operations outside of the Asia-Pacific region and the number-two US automaker could see its market share expand as a result of production cuts at its Japanese rivals, Mulally said.

"Clearly with the strength of our product line now and the overall demand... there's going to be some opportunity for us to serve even more consumers going forward," he said.

Ford raised its second-quarter production estimate to about 1.5 million units, up 12,000 units from a year ago, reflecting "continued strong customer demand" for its products.

Ford's earnings per share of 61 cents were up 22 percent from the same period in 2010. First-quarter revenue rose 18 percent to $33.1 billion.

The results beat Wall Street estimates and Ford shares closed 0.8 percent higher at $15.66 in New York trade.

Jessica Caldwell at Edmunds.com noted the earnings report followed Ford's best sales month in four years -- in March, when Ford knocked out rival General Motors for the top spot in US auto sales.

"Ford's momentum stems from the company's balanced product portfolio and its commitment to refresh its lineup at an aggressive pace, which keeps dealers excited and continues the buzz among car-shoppers," she said.

"Fluctuating gas prices and shifting consumer preferences don't matter much when you have a strong representative in every major product category as Ford does."

The automaker is also continuing to make progress in slashing the mountain of debt it acquired to survive the crisis, cutting $2.5 billion to end the quarter with $21.3 billion in liquidity and $16.6 billion in debt.

In North America, Ford posted pre-tax operating profit of $1.8 billion, compared with $1.2 billion a year ago, thanks to higher auto prices and sales volume.

The South America business reported a 3.4 percent rise in pre-tax operating profit to $210 million.

In Europe, pre-tax operating profit nearly tripled, to $293 million on an eightfold increase in sales, thanks in part to a favorable foreign-exchange rate.

Operations in Asia-Pacific and Africa pumped up a 43 percent gain in profit to $33 million.

Ford said it expects its 2011 market share in the US and European markets to be equal to or improved from 2010.

For the first quarter, Ford said it held 16 percent of the US market and 8.5 percent of the European market.