DEARBORN - “What do you think of the first quarter?” asked President and CEO Alan Mulally, as he opened the First Quarter Global Town Hall for employees in the auditorium at Ford World Headquarters. “It is fantastic! It was really fun to represent you [when the leadership team spoke to analysts and media] today.”
Ford reported a 2013 first quarter pretax profit of U.S. $2.1 billion, or 41 cents per share, and a net income of $1.6 billion, or 40 cents per share, driven by the best North America results in more than a decade and continued strong performance by Ford Credit. The company was profitable for the 15th consecutive quarter.
For the first quarter, Automotive operating-related cash flow was $700 million, a $200 million decrease from a year ago. The company's liquidity remains strong at $34.5 billion, unchanged from year-end 2012.
Wholesale volumes and total company revenue grew about 10 percent, driven by strong performance and increased market share in North America and Asia Pacific Africa.
North America reported a pretax profit of $2.4 billion, with an operating margin of 11 percent.
“We started this with North America nearly seven years ago,” Mulally said. “Everything that we are seeing today is a result of all those actions that we took to restructure the business to get back to profitability and the acceleration of the development of all our new products. This is the front end of what it will look like for the entire corporation going forward.”
South America posted pretax operating losses because of unfavorable currency exchange rates in Venezuela and Argentina. Europe also reported pretax operating losses, due to higher structural costs including restructuring effects and higher pension expense as a result of lower discount rates.
Ford is continuing to take the same decisive action in Europe as in the North American restructuring. For Europe, the plan is to take the same aggressive actions done in the U.S. The plan is led by the product, enhancing the brand and restructuring to get back to profitability.
“It has just been tremendous progress,” he said. “A very tough environment – still tough – everyone is working to get Europe going again. We are doing the right thing to restructure our business and bring in more of our world-class One Ford products. Great job by Stephen Odell and the entire team.”
Asia Pacific Africa posted pretax profit of $6 million, with strong growth in wholesale volume and revenue. In the region, market share was 3 percent, a 30 percent improvement from a year ago.
“The industry is up, the volume is up, our share is up – in China we have the highest first quarter share we have ever had,” Mulally said. “This is a really important inflection point for all of our investments starting to pay off.”
Ford Credit continues to support the business with a pretax profit of $507 million, $55 million higher than a year ago.
Following the first quarter financial results, Mulally took questions from the room and around the globe.
Duane Bitner, Purchasing, asked about the transition from Ford E-Series to Ford Transit, and how brand equity would play a role.
“The Transit family is so popular around the world,” Mulally said. “This is a tremendous development for us to be able to bring in the flexibility and the capability of that whole E-Series family with an added level of performance with the Transit family.”
Mulally asked Jim Farley, executive vice president, Marketing, Sales and Service and Lincoln, to share his perspective on how the Transit will go to market.
“We are going to be selling E-Series and Transit together for a period of time, which is really key for our big fleet customers,” Farley said. “We also were able to get some early Transit models in our fleet customers’ hands.”
While customers love E-Series, they want better fuel economy and more choices.
“Unlike a lot of our other business where we have to conquest, fleet customers love Ford,” he said. “They trust us. And now we are going to give them better fuel economy and more choices. Transit is going to super charge our business along with Transit Connect.”
Mike Beattie, Service Engineering Operation, asked about trade agreements the U.S. is working on, and the inclusion of Japan in the Trans-Pacific Partnership.
“We are all becoming aware of the importance of global trading rules,” Mulally said. “Markets should set the exchange rates, not countries.”
Mulally ended the Town Hall by thanking everyone for their hard work and encouraged the team moving forward.
“Great start to the year, great quarter and thank you one more time for everything you are doing for Ford here in Dearborn and also all around the world,” Mulally said. “Thank you and we will see you next quarter.”