US firm is confident of avoiding bankruptcy proceedings
23 July 2009

Ford has recorded a $2.3 billion (£1.39 billion) net profit in the second quarter of 2009.

Ford’s position has been boosted by restructuring its debt and it is the only one of the big three car makers in the US not to enter bankruptcy protection proceedings.

The firm actually lost $424 million (£256 million) on an operating basis in the quarter, but it was lifted into the black thanks to the restructuring of its debt.

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In 2008 Ford’s second quarter operating loss was $1 billion (£605million) and its net loss was $8.7 billion (£5.26 billion). Ford said it ended the quarter with $21 billion (£12.7 billion) in gross cash and it was confident of not having to enter bankruptcy protection proceedings.

Ford used $1 billion (£605 million) on an operating basis during the quarter, $2.7 billion less than in the first quarter of this year. Ford said its spending in the second half would be significantly lower than in the first half.

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Ford is still predicting it will sell up to 11 million units in the US in 2009 and more than 15 million units in Europe. It said its financial position had been boosted by the launch of several new models, including the new Fiesta and Ka.

The success of these new models has seen Ford increase its market share and it expects this to remain the case for the foreseeable future.

Ford’s chief executive Alan Mulally said, “While the business environment remained extremely challenging around the world, we made significant progress on our transformation plan.”

However, the success story did not extend to Volvo, the struggling Swedish brand that Ford is trying to sell.

Volvo nearly doubled its quarterly loss before tax to $231 million (£140 million), compared with a loss of $120 million (£72.6 million) a year ago. Volvo’s second-quarter revenue was $2.9 billion (£1.75 billion), down from $4.3 billion (£2.6 billion) a year ago.

Lewis Booth, Ford’s chief financial officer, said talks to sell Volvo were “ongoing”, but declined to comment on a timetable or potential bidders.

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