Ford Likely to Expand Operating Margins Even More: CEO

Ford's operating costs margin increased to 7.7 percent from 6.2 percent in the first quarter through strength of products and improving its fundamental productivity, the CEO of Ford told CNBC Tuesday.

"Now clearly when we're growing on the top line, based on the strength of our products and we are improving our productivity, we have a chance to expand our margins going forward," Alan Mulally said.

This wasFord's most profitable first quarter since 1998. The automaker is now net cash positive with automotive gross cash exceeding debt by $4.7 billion. Its revenue jumped 18 percent and profits surged 40 percent.

In addition, Mulally went on to say the automaker has incorporated rising commodity costs, such as rubber, oil and steel, in its planning.

"These will continue to increase, especially driven by the demand in Asia Pacific. We have that covered with our supplies and the commodity exchanges themselves, plus what we are doing at Ford and our productivity," Mulally said.

Also, Ford is maintaining that its sales rate will remain strong, despite the uncertainty.

  • Ford's First Quarter Results Here

"Fundamentally we believe that there's a lot of uncertainty ... and so we maintained our guidance of 13, 13.5. But clearly when we find out more about the Japanese competitors and what they can do, and also what we can do to increase production to support the near turn demand then we'll have a better idea over the next quarter," Mulally concluded.

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