Ford Motor Company may announce its biggest annual profit since 2000 on Friday on better cost control and higher sales to become the number two auto company in the US.
Ford Motors had announced a net profit of $10.2 billion in 2000 while it’s expected to announce a profit of $8 billion (£5 billion) this time around, although sales are lower by 33 percent in 2010 compared to 2000.
Higher profit margins, i.e. bigger margins on lower sales have been the strategy since CEO Allan Mulally joined the company in October 2006.
The company has been profitable for two years in a row compared to a $30 billion loss it booked between 2006 and 2008.
The company is now focused on increasing profitability rather than struggling for survival, said Mulally and Executive Chairman Bill Ford.
Ford has been below investment grade since May 2005 and investors will wait for the steps to be undertaken by executives to return to investment grade.
Ford has reduced its debts on books and the automotive operation has a debt of $22.8 billion and cash of $20.3 billion.
Ford expects to remain profitable in 2011, but net margins may dip, said the company. Because of debt reduction, ratings agencies have raised Ford’s rating; however, it still remains two notches below investment grade.
Ford had raised $23.5 billion by mortgaging most of its assets and used the fund to develop new products. While its rivals GM and Chrysler took government bailout money, Ford managed to stay away from such funding.
The US auto sector saw sales rise by 11 percent in 2010 while Ford’s sales grew by 19.5 percent.