Ford Handily Tops Profit and Sales Expectations

Ford Motorblew past Wall Street's second-quarter profit and sales expectations and said it expects improved financial results in 2011.

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Ford reported a profit of 68 cents a share, excluding items, up from a year-ago loss of 21 cents a share.

Revenue rose 15 percent from the same period a year ago to $31.3 billion.

Shares gained 4.5 percent in premarket trading.

On average, analysts surveyed by Thomson/Reuters expected that the automaker would earn 40 cents a share, with sales of $29.8 billion.

Ford CEO Alan Mulally told CNBC that the current economic conditions remain challenging but he expects the company to continue to grow in the second half, with the total year's sales expected to reach 11.5 million to 12 million units.

The company lowered the top end of its range for U.S. auto industry sales for 2010, while saying it expects to move from a net automotive debt position to a net cash position by the end of 2011.

"Ford has a lot of room to create a lot of value for a lot of people," he said. "We have a slow recovery going forward. We have sized ourselves and our capacity that if it comes back faster...we can produce the vehicles that we want."

Financing arm Ford Credit posted an $888 million profit and remains an integral part of the company, Mulally added.

"In Ford's case we have absolutely used our finance company to laser-focus on our consumers and our dealers, which has allowed us to weather the recession and also come out of this stronger than before," he said.

Ford said it was on track to be profitable in 2010 with second half profits lower than the first half.

Its second-quarter net profit rose to $2.6 billion from $2.26 billion in the year earlier quarter when the automaker had gains from debt reduction efforts. Earnings per share fell to 61 cents from 69 cents due to a higher outstanding share count.

Ford has posted four consecutive quarters of pretax automotive and total company operating profits, despite a severe downturn that pushed U.S. auto industry sales to their lowest levels since the early 1980s.

The automaker has announced plans to discontinue its Mercury brand and expects to complete the sale of its Swedish brand Volvo to China's Geely in the third quarter. It intends to focus on its mass market Ford and luxury Lincoln brands.

Ford said it recorded $229 million of personnel and dealer-related charges in the second quarter, primarily for the discontinuation of the Mercury brand.

Ford, the only large U.S. automaker to avoid bankruptcy in 2009, borrowed more than $23 billion in 2006 to fund its turnaround, leaving it with a heavier debt load than rivals General Motors and Chrysler.

Ford trimmed automotive debt by $7 billion in the second quarter and said it expects to continue debt reduction. It ended the quarter with $27.3 billion of automotive debt.

Automotive operating cash flow was $2.6 billion in the second quarter, and Ford ended the quarter with gross cash in the automotive business of $21.9 billion after executing debt-reduction plans.

—Reuters contributed to this report.