Ford's (F) - Get Report second-quarter results were just one more sign that the automaker is riding a wave -- better cars, a positive image that respects its traditions and, of course, the bankruptcies that befell its two U.S. competitors.
In afternoon trading, Ford shares were up 9.7% at $7. For the year, they are up 67%.
"The results today show we are making progress on customer satisfaction, revenue, margins (and) fundamental restructuring," said CEO Alan Mullaly on an earnings conference call.
"Consumers are much more aware of Ford, moving to consider and buy Ford: they really appreciate the full product line," Mullaly said. "They believe that Ford is really building a strong business."
Mullaly is "more confident than ever that we have the right plan" and reiterated that Ford expects to be profitable in 2011, but resisted when an analyst questioned whether the profits might come sooner, saying, "This is still a very fragile economy."
While Ford said Thursday that it expects economic improvement in the second half,
was saying it sees no sign of improvement during the current quarter.
Ford's outlook is not without headwinds. "What we are not committing to is (that) third quarter will be sequentially better than second quarter," said CFO Louis Booth. "We are not guaranteeing we will be able to meet the sequential improvement."
Booth said capital expenditures, down a bit in the second quarter, will rise in the current quarter, and noted that cash flow will decline in the second half, relative to the first half. Ford Credit had a strong second quarter that is unlikely to be replicated in the near term, he said, Additionally, Ford has increased production levels, betting on a recovery. "If we don't see recovery, we'd be looking at production again," Booth said.
Ford said Thursday that its second-quarter U.S. market share increased by two points to 16.4%, while its European share rose a half point to 9%, the highest second-quarter level in 10 years.
In a recent report, Merrill Lynch analyst John Murphy wrote "Ford's market share gains should continue driving upside in estimates." He said the severe downturn in demand in 2008 and 2009 "will be long lasting and put
at a larger disadvantage relative to Ford." Merrill Lynch has a financial relationship with Ford that includes management of a recent public offering.
For the quarter, Ford beat estimates, losing 21 cents a share, where analysts surveyed by Thomson Reuters had estimated a loss of 49 cents, and easily besting revenue estimates . Revenue fell 38% to $27.2 billion. Analysts had estimated $24.8 billion. In the same period a year earlier, Ford lost 63 cents a share.
The company ended the quarter with $21 billion in automotive gross cash, a slight decline from $21.3 billion at the end of the first quarter.