Ford uses profit to chase rivals in emerging markets

Ford Motor Co., profitable last year for the first time since 2005, is stepping up spending in fast- growing markets in South America and South Africa to help catch up to General Motors Co. and Toyota Motor Corp.

"Ford was very, very unhealthy just a few years ago, but now they are able to start investing again," Rebecca Lindland, an IHS Global Insight Inc. forecaster, said in an interview today. "The places they are investing are seen as the growth markets."

Spending to retool factories will increase by $207 million in South Africa, $282 million in Brazil and $250 million in Argentina, Ford said this week. Industrywide global sales may rise 4 percent to 66.9 million autos in 2010, researcher J.D. Power & Associates estimates.

After shunning a U.S. bailout and avoiding bankruptcy, Ford reported $2.7 billion in net income in 2009, ending losses totaling $30 billion in the three previous years. Capital spending may increase $1 billion in 2010, Chief Financial Officer Lewis Booth said in a February interview.

"Despite being a top-five automaker in the world, Ford trails the top players such as Volkswagen and GM in many emerging markets," said Brian Johnson, a Barclays Capital analyst, who rates Dearborn, Michigan-based Ford "equal weight."

Ford has about half the sales of GM, Volkswagen AG and Fiat SpA in South America and is well behind in South Africa, said Johnson, who is based in Chicago. Toyota is the world’s largest automaker.

Ford rose 9 cents to $12.72 in New York Stock Exchange composite trading. The shares have gained 27 percent this year after surging more than fourfold in 2009. About 46 percent of Ford’s $118.3 billion in 2009 revenue came from outside North America.

Ford’s 7.45 percent notes due in July 2031 rose 0.625 cent to 93 cents on the dollar in New York, according to Trace, the bond-price reporting system of the Financial Industry Regulatory Authority.