Ford Motor Company posted an US$8.8 billion ($8.3 billion) pre-tax operating profit in 2011, and has made business decisions that show it is confident of remaining profitable for the foreseeable future.
The 2011 result was the company’s biggest annual profit since 1998 – up US$463 million ($435 million) from 2010, and light years ahead of 2009’s US$38 million profit.
Ford’s net income was given a boost by the elimination of a valuation allowance against deferred tax benefits. The valuation allowance was created in 2006 when Ford began posting operating losses. Analysts say the move suggests Ford has reached a level of confidence in its ability to generate substantial income over the coming years.
The turnaround in the past few years has been significant. Between 2006 and 2008, Ford lost US$30.1 billion ($28.3 billion) as the global economy and vehicles sales plummeted.
Ford’s full-year automotive revenue was US$128.2 billion ($120.4 billion) in 2011, up US$17 billion ($16 billion) from the previous year. North America’s pre-tax operating profit increased from US$5.4 billion ($5.1 billion) to US$6.2 billion ($5.8 billion). Ford South America was the only other region to record a profit.
The Asia Pacific Africa region – which includes Australia – was Ford’s worst financial performer of the year. Its US$92 million ($86 million) loss was well off the US$189 million ($177 million) profit it posted in 2010, and Ford says the Thailand floods – which cost it production of 34,000 vehicles – are largely to blame.
Ford Europe was also disappointing, down from a US$182 million ($171 million) profit in 2010 to a US$27 million ($25 million) loss in 2011.
Ford says it made major progress with its One Ford strategy in 2011 and insists it remains on track to meet its mid-decade goals. This year will see the rollout of the new medium-sized Fusion/Mondeo, the Escape/Kuga compact SUV, and the EcoSport sub-compact SUV, and will see a global expansion of the EcoBoost engine family. Ford recently announced it was tripling its production capacity of EcoBoost-equipped vehicles.
Ford expects its 2012 pre-tax operating profit to be about equal to 2011.