Ford down 8%; Chrysler profit up 30% but loan repayments fuel loss

Jul 26, 2011

Citing higher costs in materials and development, Ford’s 2nd-quarter profits dipped $2.4 billion, or 8%. The automaker’s CEO, Alan Mulally, and CFO, Lewis Booth, told reporters that despite its debt burden and falling profits outside North America, the company’s debt load ($14 billion) dropped and its cash total ($22 billion) rose.

Still, Mulally, as quoted by Automotive News, stated, “We delivered very good second-quarter results while growing the business globally and serving more customers in every region. Despite an uncertain business environment, we further strengthened our balance sheet and continued to invest for the future.”
Ford’s North American operations provided a “pre-tax operating profit of $1.9 billion, an increase of $10 million from a year ago,” automotive News’ Jamie LaReau reported. “Ford attributes that rise to improved net pricing, higher volumes and a more favorable mix of vehicles, meaning more sales of higher-margin cars and trucks.”

Chrysler’s 2nd-quarter net loss comes as it repaid the U.S. treasury and Canada for their bailout loans two years ago. Overall net revenues increased 30% over year-ago revenue, the automaker, now majority-owned by Fiat. The increase was primarily due to increased volumes and positive pricing and mix attributable to the 16 all-new or significantly refreshed products in the marketplace. First-half 2011 net revenues totaled $26.8 billion, up 33% from 2010’s 1st half.

“There is no doubt that Chrysler Group has taken a huge step forward this quarter,” said Sergio Marchionne, Chrysler Group’s CEO. “Refinancing our debt and repaying our government loans six years early reinforces our conviction that we are on the right path to rebuilding this company and restoring it to its rightful place on the global automotive landscape.”