Business
Ford Posts Profit After Debt Reduction Promises To Break Even 2011
Ford Motor posted a $2.3 billion quarterly net profit, mainly due to gains from a $10 billion debt-reduction plan, and said it was on track to at least break even in 2011, sending its shares up 10 percent.
Ford posted an operating loss for the quarter that was better than analysts expected, excluding a net gain of $2.8 billion from one-time items that included the debt-reduction actions, despite reeling global markets that helped push US rivals General Motors and Chrysler into bankruptcy.
Ford expects the US economy to start to come back in the third quarter, with further improvement in the fourth quarter and into 2010, but it is “still a very fragile economy,” Chief Executive Alan Mulally said in a conference call.
An overall and North American profit in 2011 would be the first such mark for the US automaker since 2004.
Ford posted a net profit of 69 cents per share for the second quarter, versus a net loss of $2.7 billion, or $3.89 per share, a year earlier.
The loss from continuing operations and excluding one-time items was $638 million, or 21 cents per share. Analysts on average had expected a loss of 50 cents per share on that basis, according to Reuters Estimates.
Revenue fell to $27.2 billion in the quarter, from $38.2 billion a year earlier. Analysts had expected $23.39 billion.
Ford said its auto business burned through $1 billion in cash in the second quarter, an easing from the first quarter’s $3.7 billion outflow. The automaker said it expects cash flow to improve the rest of the year.
“The cash burn is really being wiped off quickly,” said Erich Merkle, president of auto consulting firm Autoconomy.com. “They are well ahead of schedule. I think Ford returning to profitability will be sooner than most expect.”
Ford cut its automotive debt by about $10 billion by completing a series of transactions in early April, and raised $1.6 billion through a public stock offering in May, using proceeds to support funding for a US union retiree healthcare trust. It expects to pursue more balance sheet improvements.
Meanwhile, Ford executives have said the company has sufficient liquidity to complete a turnaround plan, leaving investors focused on cash preservation and debt reduction.
The automotive business ended June with $21.0 billion in cash, compared with $21.3 billion at the end of March. Its debt burden stood at $26.1 billion at the end of June, down from $32.1 billion at the end of March.
The company borrowed $23 billion in 2006, secured by most of its remaining assets, including the Blue Oval logo, to support a multilayered restructuring and now carries a far heavier debt burden than post-bankruptcy GM and Chrysler.
Ford posted losses totaling $30 billion from 2006 through 2008 – including a company record of $14.7 billion last year – and reported a $1.43 billion loss in the first quarter.
The Dearborn, Michigan-based automaker has been navigating a US downturn now in its fourth year with industry sales reaching their worst levels in three decades. It has not taken emergency US government loans.
Ford’s US sales fell about 33 percent in the first half of 2009, the best result among the top six-selling automakers.
Overall, Ford expects US auto industry sales of 10.5 million to 11 million vehicles in 2009, including medium and heavy duty trucks. Ford’s planning assumptions for 2010 call for US industry sales of 12.5 million vehicles next year.
The automaker is restructuring to operate profitably in a smaller US auto market and to meet an expected increase in consumer preferences for cars over larger SUVs and pickup trucks that drove profits a decade ago.
About 1,000 United Auto Workers-represented hourly employees accepted buyouts or early retirements in its latest offer, leaving Ford with about 47,000 hourly workers, a level it is comfortable with, the automaker said.
In recent weeks, Ford also reached an agreement with the UAW to adjust its funding options for the retiree healthcare trust, known as a Voluntary Employee Beneficiary Association.
The agreement gives Ford the option to make half of its required contributions in stock at the market rate for payments due in 2009, 2010 and 2011, rather than a fixed stock price, making it potentially less dilutive with the shares rising.
The automaker remains in talks with the UAW on other issues to ensure that Ford has a labor cost parity following the concessions the union granted to GM and Chrysler.
The automaker has sold several businesses to raise cash and focus its operations including its Aston Martin, Jaguar and Land Rover brands from its former premier auto group. Ford is also entertaining offers for its Volvo brand.
Booth said Ford was talking to a number of interested parties for Volvo, the Swedish luxury car brand that is the last member left from its premier auto group.
Ford Credit, the automaker’s captive financing arm, reported net income of $413 million in the quarter, up from a $1.4 billion net loss a year earlier.
Ford shares were up 65 cents or 10.2 percent at $7.03 on Thursday on the New York Stock Exchange, a 14-month high.
Business
NASS Engages Agric Minister On Food Crisis
The National Assembly through its joint committee on Agriculture Production Services and Rural Development has engaged the Minister of Agriculture and Food Security, Senator Abubakar Kyari on an urgent solution to food inflation bedeviling the country.
The committee chaired by Senator Saliu Mustapha (APC Kwara Central), at an interface with the Minister, interrogated him on plans being put in place to arrest high cost of food prices in the country and make it affordable and available to the poor masses.
In his response, the Minister said the Federal Government has commenced distribution of 42,000 metric tonnes of grains to some focal points of state capitals nationwide.
“We have received directive and approval from Mr. President to distribute for immediate impact 42,000 metric tons of assorted grains free of charge to the Nigerian population.
“This was received in mid-February, as we are speaking, we have a record of the distribution being carried out, but I will want to plead with the honorable house and distinguished senators that some of the movements can’t be made public but a lot of states have started receiving their grains.
“We are distributing to state capitals in the first instance as you all are aware of the risk involved in the vandalism of foodstuff so we are working with the office of the national security adviser and other national security agencies.
“Furthermore, 58,500 metric tonnes of milled rice from mega rice millers will also be released into the market for stabilisation”, he said.
Speaking with newsmen shortly after the interactive session, Senator Mustapha expressed satisfaction with the steps being taken by the federal government.
He said: “From our interactive session, we are on the other side of the parliament; we are fully in the picture of what is happening, we are convinced that the steps being taken by the federal government are in the right direction.
“All we did again is to further emphasise on the need for certain things to be done on time, I think from this collaborative approach by the grace of God, Nigerians will have a better feel of the government policy on food security”.
Business
Obj Harps On Cheap Credit, Policy Consistency For Food Production
Nigeria’s former President, Olusegun Obasanjo, has called on the government to provide cheap credit and ensure policy consistency to enable farmers increase food production in the country.
The former President made the call as food inflation and nutrition security concerns grow in Africa’s most populous country.
Obasanjo’s made the call at the 9th Agrofood & Plastprintpack conference in Lagos recently, where he said farmers in the country were yearning for consistency in policy and single-digit interest loans to drive growth in the sector and attain food security.
“Policy sustainability and predictability is what farmers want. It helps them to plan. Availability of finance is also what farmers want. They cannot survive on the double digital interest rate”, Obasanjo, who is also a farmer, said at the conference.
According to him, food and nutrition security start with availability, then affordability by ensuring that everyone who needs food can get it.
He noted that food was one of the major imperatives in life, adding that “there cannot be food without agriculture and agribusiness”.
Obasanjo further stressed the importance of agriculture in changing the fortunes of the economy, with attendant exponential gains by way of earnings, employment, food security and other spin-offs.
He noted that agriculture must be made attractive to the country’s teeming youth population, saying this would address the rising unemployment, worsening insecurity and youth migration through the Mediterranean.
“We have to make agriculture attractive to the youths. We have to think within and outside the box to make it attractive to the youths so they are willing to get their hands dirty and feet wet”, he advised.
He continued that “Part of the security issue is owing to our inability to get them engaged. The need for agro-food and agribusiness is for food security, employment, wealth creation and income generation, particularly foreign exchange”.
Speaking also, Wouter Plom, the ambassador of the Kingdom of the Netherlands, said his country had faced challenges similar to those Nigeria confronts – feeding a growing population with limited resources.
He said as partners with a joint vision, the Netherlands and Nigeria recognise that the agricultural sector was one of the prominent drivers for economic growth.
He noted that the Netherlands has further strengthened its partnership with Nigeria to boost the agriculture sector in three main areas- economic growth, improved diets and youth employment.
The ambassador noted that all the challenges in driving growth through the sector, improving diets and tackling unemployment can be addressed when food production is efficient.
Paul Maerz, Managing Director of Fairtrade Messe, said with more investment in agro-food & plastprintpack solutions, products and technologies, brighter days were ahead for Nigeria’s agriculture.
Business
Abuja Farmers, Others Lose N12bn To Ginger Disease
The Federal Government, has confirmed the outbreak of ginger blight epidemic in four States in Nigeria, saying ginger farmers have lost over N12 billion due to the disease.
The government disclosed this at the inauguration of the National Ginger Blight Epidemic Control Taskforce in Abuja, revealing that the fungal disease had inflicted significant damage on ginger farms in Kaduna, Nassarawa Plateau and the Federal Capital Territory.
The Minister of State for Agriculture and Food Security, Aliyu Abdullahi, said the blight had caused billions of naira in losses, impacting not only the livelihoods of farmers, but also Nigeria’s position as the world’s second-largest ginger producer.
“Our preliminary estimates suggested that affected farmers in southern Kaduna lost over N12bn.
“Furthermore, considering that over 85 per cent of Nigeria’s ginger cultivation occurs in this region, we can safely assume a substantial loss of cultivated land, potentially exceeding 70 per cent of total land”, he stated.
Abdullahi, however, stated that the Federal Government through the National Agricultural Development Fund would launch a N1.6bn recovery package for affected farmers in ginger-producing areas.
He said the ginger blight epidemic served as a stark reminder of the importance of preparedness in safeguarding agricultural resources, adding that by investing in research, extension services and farmer support systems, “we can build a more sustainable future for our agricultural sector”.
On his part, the Chairman of the task force committee, Abubakar Abdullahi, said there was no doubt that the blight on ginger had negatively affected the Gross Domestic Product earnings from this subsector.
“It is of necessity and great urgency that various subcommittees are put in place to forestall these negative effects”, he stated.
Abdullahi assured the minister of the commitment of the team to salvage the situation, as he pleaded with the minister to give the committee the power to co-opt members that would add value to the task force to discharge their duties efficiently and effectively.
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