DEARBORN, Mich. (AP) — Ford earned its biggest profit in more than a decade in 2010 as robust car and truck sales and years of cost cuts paid off for the company.
The results disappointed Wall Street, however, and Ford's stock price fell 6 percent to $17.73 in premarket trading. The reaction hinted at the difficulties the company still faces, even though it's remade itself in recent years.
Ford last year earned $6.6 billion, or $1.66 per share, compared with $2.7 billion, or 86 cents per share the year before. Without one-time items such as charges for debt reduction and the discontinuation of its Mercury brand, Ford would have earned $1.91 per share, short of the $2.05 expected by analysts
Four years ago, Ford had posted a string of huge losses and its future was in doubt. It got a $23.5 billion loan by mortgaging its factories and other assets, including its blue oval logo. Then it shed most of its brands, closed or sold a quarter of its plants and cut its global work force by more than a third. It also slashed labor and healthcare costs, plowing the money back into the design of some well-received new products like the Ford Fusion sedan and Ford Edge crossover.
Ford's profit for the fourth quarter dropped 79 percent to $190 million, or 5 cents per share in the fourth quarter .Results included a $960 million charge for debt conversion offers that helped lower its debt. Without those charges, Ford would have earned 30 cents per share, below the 48 cents Wall Street anticipated.
Ford Chief Financial Officer Lewis Booth said the company fell short in the October through December period because its costs rose more than analysts expected. The higher costs were due in part to increased advertising for new vehicles such as the Focus small car in Europe and the Explorer SUV in North America. The company also rolled out new engines for the popular F-series pickup truck during the quarter, he said.
The company also lost money in Europe even though it had expected a profit.
He predicted that Ford will have another strong year of new products. Ford did not cut back on vehicle development during the recession, he said.
Ford showed confidence in its future earlier this month when it announced it will hire 7,000 workers over the next two years. On Friday, the company said its 40,600 U.S. hourly employees will get profit-sharing checks in March that average $5,000. It's the company's first profit-sharing payment since 1999.
Ford's U.S. sales jumped 20 percent last year — double the rate of the industry — as an improving economy spurred demand for the company's F-Series pickups and other vehicles. Ford became the top-selling brand in the U.S. last year, beating out Chevrolet and Toyota for the first time since 2003.
Revenues rose 3 percent to $120.9 billion.
Ford ended the year with $19.1 billion in debt and $20.5 billion in cash. It was the first time Ford has had more cash than debt since the second quarter of 2008.
Last year's results included $853 million in charges for reducing the company's debt, including losses for converting notes to stock and cash. Ford said it cut its debt from $33.6 billion to $14.5 billion in 2010. The cuts its interest payments by a little more than $1 billion.
Ford also reported a $339 million charge for the discontinuation of the Mercury brand. Ford announced last summer it would stop producing Mercurys by the end of the year.