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The increase is due in part to lower incentives, and because buyers are choosing more expensive trim levels and options, such as heated seats in a subcompact Ford Fiesta, said Chief Executive Alan Mulally.
Operating profit of $2.8 billion was the strongest for a first-quarter since 2004 and $2.1 billion of that was from automotive operations as consumers continue to embrace the automaker's vehicles, which include new and fuel efficient models. Total revenue was $33.1 billion, up $5 billion from the same period in 2010.
"Our team delivered a great quarter, with solid growth and improvements in all regions," Mulally said.
North American operations saw a pre-tax operating profit of $1.8 billion, which is up $591 million from a year ago.
The increase also is attributable to lower incentives and the popularity of more expensive trim levels and options.
Ford posted an operating profit of $293 million in Europe, after a disappointing fourth quarter that included losses in Europe.
Company officials said price discipline and upgrades to a number of vehicles -- including the S-Max, Mondeo and Galaxy -- contributed to the turnaround in Europe.
Lower debt
In continued efforts to return to investment grade, which it lost in 2005, Ford said today it reduced its debt by $2.5 billion during the quarter, to $16.6 billion. The automaker shaved $1 billion in interest costs in 2010 by paring its debt by $14.5 billion to $19.1 billion.
Ford stock closed at $15.54 Monday and was up about 3.5 percent to the $16.10 range this morning in trading before the regular opening of the New York Stock Exchange. The company's shares have dropped 7.4 percent this year.
Ford reported $21.3 billion in gross cash at the end of March, up $800 million. Total liquidity sits at $30.7 billion, an increase of $2.8 billion from the end of 2010.
Ford Credit posted an operating profit of $713 million, which is a decrease of $115 million from the same period in 2010. Chief Financial Officer Lewis Booth said that while Ford Credit will be "solidly profitable" this year, it likely will fall $1.1 billion lower than in 2010.
Sales climb
The Dearborn-based automaker sold 1.4 million vehicles in the first three months of the year, up 150,000, or 16 percent, excluding the Volvo brand that was sold. Ford's U.S. sales last month eclipsed sales by crosstown rival General Motors Co. for the second time in 13 years.
"Ford earning's report follows its best sales month in four years," Edmunds.com Senior Analyst Jessica Caldwell said in a statement this morning.
"Ford's momentum stems from the company's balanced product portfolio and its commitment to refresh its line-up at an aggressive pace, which keeps dealers excited and continues the buzz among car-shoppers.
"Fluctuating gas prices and shifting consumer preferences don't matter much when you have a strong representative in every major product category as Ford does," Caldwell said. "The challenge for Ford will be maintaining this momentum - there's more pressure when you're the one to watch."
Gasoline prices have not affected earnings, Ford officials said, but the automaker is seeing some shifting of sales to smaller vehicles.
April sales will be announced next week.
In response to higher costs of raw materials and commodities, Ford increased its prices by an average of $117 per vehicle at the end of the quarter.
Commodity costs added about $300 million in cost in the first quarter and are expected to cost the automaker an additional $2 billion over the year. Japan's calamities are not having a "material" impact on Ford earnings, officials say, meaning losses are not expected to be significant enough to affect the market, although it remains a fluid situation.
In the Asia-Pacific region, the automaker has lost 12,000 to 14,000 units of production so far in the second quarter, including three plants down this week, one of which will remain idled next week. The numbers could continue to grow slightly in Asia-Pacific, but no other regions have lost vehicle production due to parts shortages from the crisis.
Despite the crisis in Japan, Ford said it will increase global production in the second quarter to 1.5 million vehicles which is 12,000 more than the same period in 2010.
From The Detroit News: http://detnews.com/article/20110426/AUTO01/104260382/Ford-posts-strong-first-quarter-earnings-of-$2.6B#ixzz1Ke5d9a2x