Ford expects earnings improvement in 2011

Ford Motor Co expects earnings improvement in 2011 after solid profits in 2010 as its turnaround gains traction, executives said at its annual meeting of shareholders on Thursday.

Ford Chief Executive Alan Mulally said improvement in the economy globally and a strong new vehicle lineup gave him confidence in expecting a "continuing improvement" in 2011.

"It's a slow gradual recovery, especially in the United States, but very solid fundamentally," Mulally told reporters after the meeting.

Ford, which posted a profit in 2009, is focused on reducing a high debt load, but would make dividend reinstatement a topic for future discussion after it addresses its balance sheet, Executive Chairman Bill Ford Jr. said.

"It's very early days in our recovery ...," Ford said during the meeting. "The most important thing we can do as a company is to get our balance sheet strengthened and in order."

"At some point in the future if we continue our progress, and we expect that we will, that will be a topic for discussions," Ford said of the dividend.

The automaker's stock price has quintupled since the end of 2008 leaving stockholders with something to hang onto even without a timeframe for a dividend. The dividend was eliminated in 2006 as Ford started its turnaround plan.

In April, Ford said it expects a solid pretax profit in 2010 excluding special items. Its previous forecast was 2011 profit on that basis. The automaker posted losses of $30 billion from 2006 through 2008.

Ford lowered its break-even point in a restructuring that avoided bankruptcy, while gaining most of the cost cuts that Detroit-based rivals General Motors Co GM.UL and Chrysler Group LLC achieved in government-supported bankruptcies.

Ford has a far heavier debt load than GM or Chrysler after taking a more than $23 billion "home improvement loan" in late 2006 and had $31.3 billion of automotive debt after a repayment in April. It expects debt reduction efforts to accelerate as it produces positive cash flow and profits.