Good Leadership Helped Ford Stocks Triple in the Past Year


Image: Agencia Brasil

Ford reported $2.1 billion in Q1 profits this morning, much higher than expected. Added bonus: Ford stocks have tripled since this time last year, when they were hovering around $4. (Current prices are also at a 5-year high). BusinessWeek has more:

The profit marked Ford’s fourth consecutive quarter of net income, the longest streak since 2005. Excluding some gains and costs, earnings were 46 cents a share. Ford’s 37 percent surge in U.S. deliveries through March more than doubled the industrywide increase, helping the second- largest U.S. automaker add domestic market share at the fastest pace in 33 years as the auto market rebounds. Ford was alone among its U.S. peers in avoiding bankruptcy in 2009.

The Fusion sedan, F-150 pickup and Focus small car drove Ford’s first-quarter U.S. sales gains…Net vehicle prices increased $1 billion last quarter, Ford said today, as (CEO Alan) Mulally pared discounts while selling new vehicles with more options that fetch higher prices.

Redesigned models such as the Taurus sedan helped boost U.S. market share through March to 17.4 percent from 14.7 percent a year earlier, the biggest jump since 1977, Ford has said. Ford has said it is attracting buyers from Toyota Motor Corp. after global recalls of more than 8 million vehicles.

The stock may be under pressure today because Ford’s results were boosted by “unsustainable” gains at finance unit Ford Motor Credit from rising resale prices, Himanshu Patel, a JPMorgan Chase & Co. analyst in New York, told investors in a note today.

Ford’s “Way Forward” restructuring plan and Former Boeing CEO Alan Mulally, who took over at Ford in 2006, deserve a lot of the credit for Ford’s current success. Mulally sold or sheared off Ford’s controlling stake in five brands: Aston Martin, Mazda, Jaguar, Land Rover, and Volvo. In 2005, under the “Way Forward” plan, Ford sold Hertz Rent-a-Car to a private equity group, and also sold its controlling stake in India’s Mahindra and Mahindra. In lieu of a government bailout, Mulally mortgaged Ford’s assets, a move that left the company with more debt, but also allowed it to avoid the drastic downsizing and government control that crippled Chrysler and GM. The list goes on.

Ford got to where it is today by acting like a business, not a zombie. It deserves its success.