Ford Motor Co. has dodged bankruptcy and found the black.
While rivals General Motors Corp. and Chrysler Group filed for Chapter 11 bankruptcy protection in the second quarter, Ford said Thursday that it earned $2.3 billion in the period thanks to aggressive cost cutting and debt reduction.
The results exceeded estimates. And although the company still lost $424 million in its automotive operations, that, too, was a vast improvement from the $1 billion it lost on its core business a year earlier, underscoring the story that Ford's turnaround plans are succeeding.
"Given the current automotive industry environment, we consider the quarterly performance strong," said Efraim Levy, equity analyst at Standard & Poor's.
The results drove Ford shares up 60 cents, or 9.4%, to $6.98, the company's highest close since May 2008.
The automaker's second-quarter profit of 69 cents a share, compared with a record loss a year earlier of $8.7 billion, or $3.89 a share, comes largely thanks to one-time gains related to restructuring of corporate debt. Its revenue fell to $27.2 billion, compared with $38.6 billion a year earlier.
Ford had been expected to lose about 52 cents a share, based on Wall Street analysts' expectations.
Still, the positive bottom line is clearly a boost to the company, which remains the only U.S. automaker able to resist taking emergency funding from the federal government and avoid filing for bankruptcy.
Chief Executive Alan Mulally said the company remained "on track to meet" its goal of reaching the break-even point, or even an operating profit, by 2011 as it rolls out new products in a bid to pull market share from battered competitors such as GM and Chrysler, as well as Asian rivals.
"Clearly the road ahead remains challenging," said Mulally, citing the continuing problems in the world economy. "Despite the challenges, Ford's underlying business continues to get stronger."
Much of the company's improvement comes from aggressive cost cutting, including eliminating 1,000 jobs in the second quarter, combined with debt reduction and fundraising.
Ford brought in $1.6 billion in an equity offering this spring and restructured $10.1 billion in debt, thereby cutting its annual interest expenses by half a billion dollars.
At the same time, Ford has negotiated significant cost concessions with the United Auto Workers union, including reducing its cash obligations to a fund for retiree healthcare costs.
