Ford Cuts Debt, Posts 2nd Qtr. Profit
July 23, 2009 by Mark Ellis
Filed under Business
Ford Motor Co. has emerged as the strongest American automaker off the heels of its second-quarter profit of $2.3 billion. However, analysts wonder if Ford can maintain its positive momentum, especially considering that Ford’s profit mostly comes from its debt-cutting measures reducing interest payments as well as letting go of 1,000 workers.
During the last quarter, Ford managed to reduce its debt by about $10.1 billion, letting go of a significant amount of interest payments. This has helped Ford to mitigate its $424 million loss in its automotive production and financing business, which is still much better than Ford did the same time last year when it lost $1 billion from its core businesses.
Analysts have been quick to credit Ford CEO Alan Mullaly with helping Ford to avoid the dire straits that its other U.S. competitors have faced. Instead of going into bankruptcy, Ford managed to borrow $23.5 billion just before the economic crisis flared up. In an ironic turn, though, the interest payments from the loans could end up harming Ford if the company is not able to make its projected comeback.
Ford Mustang (Image: Flickr)
