Ford Motor posts surprise $2.3 bln Q2 net profit

Ford Motor yesterday reported a surprise $2.3bn second-quarter net profit, thanks largely to April's debt restructuring deal but also to well-received models that boosted its share in markets around the world.

Alan Mulally, chief executive, acknowledged that Ford's shunning of government bail-out aid had helped its image in the US, its biggest market, and said the carmaker still planned to meet its target of becoming cash positive and breaking even at the operating level by 2011.

Ford's net profit, against a record $8.7bn loss last time, came mostly from a net gain of $2.8bn from special items, and included gains from the group's $10bn debt-reduction plan.

Ford lost $424m on a pre-tax operating basis, but that was smaller than expected and less than last time's $1bn.

The carmaker, whose share has declined this decade during a downsizing, yesterday said it had lifted its US share two points to 16.4 per cent on a year ago. It gained share overseas due to vehicles such as its small Fiesta, the second best-selling car in Europe thanks to scrappage schemes.

Mr Mulally declined to comment on whether Ford might issue equity to reduce its debt, but said: "Our plan is to continue improving our balance sheet, just like we did in the second quarter."

Ford said it burned through $1bn of cash, $2.7bn less than in the first quarter.

The company said global demand for cars would still be weak this year across most markets, including the US, where it upheld a bearish forecast for industry sales of 10.5m-11m. It forecast European industry sales at 15m-15.5m.

Ford reported a near doubling of the quarterly pre-tax loss at Volvo, the Swedish premium brand it is trying to sell, to $231m, from $120m a year ago.

Lewis Booth, Ford's chief financial officer, said talks with potential buyers were continuing. He said Ford intended to sell Volvo, but "we're not going to sell it at any price".

Ford wants $1bn-$2bn and Chinese makers Geely Automobile and Beijing Automotive have expressed interest, according to people close to the sale. Efforts have also been made to assemble Swedish financial investors for a bid.

BAIC is out of the running for a majority stake of General Motors' European business after GM said yesterday it would continue "detailed talks" with Magna International and RHJ International.