Ford posts surprise quarterly profit

US auto giant Ford Motor, which has so far managed to avoid bankruptcy unlike rivals Chrysler and General Motors, joined the list of corporate winners yesterday after reporting an unexpected second-quarter profit. It made £2.3bn in the latest three-month period after gaining share in all its markets compared to the same time last year. In the previous quarter it made a record $8.7bn loss. The news surprised the markets and sent Ford shares up 7.5 per cent in New York trading.

Chief executive Alan Mulally said: "While the business environment remained extremely challenging around the world, we made significant progress on our transformation plan. Our underlying business is growing progressively stronger as we introduce great new products that customers want and value, while continuing to aggressively restructure our business and strengthen our balance sheet."

The company has managed to survive without taxpayer funding by cutting many thousands of jobs and restructuring its business with the closure of factories and facilities and the sale of brands like Aston martin and Jaguar. It still has its problems with global demand for cars likely to remain weak, but now plans to generate cash and break even by 2011.

Some analysts pointed to the fact that in spite of the improvements in its underlying business the profit was mainly down to a one-off gain of $3.4bn after debt restructuring agreements were reached in April. Excluding this the firm would instead have lost $424m.

WHAT THEY ARE SAYING:Shelly Lombard, an analyst at the Gimme Credit corporate bond research firm, in the Wall Street Journal: "Ford delivered exactly what we wanted to see -- lower cash burn. But it's still too early to tell whether Ford has got its swagger back since some of the improvement was due to market share and price gains that Ford probably picked up at General Motors and Chrysler's expense while they were in bankruptcy."

Tom Walsh in the Detroit Free Press: "The hope, of course, is that the new cash-for-clunkers law will give car sales a boost. And that Ford's surging stock price, which has more than tripled since March, will allow the company to further slash its heavy debt load by issuing new stock shares to pay off another chunk of that debt. Sure things? No, but Ford looks like a better bet with each passing month." ·