$14 billion tax gain to push Ford’s 2011 profit to $20 billion, its biggest since 1998

Article by Anita Panait, on January 26, 2012

Ford Motor Co.’s profit performance in 2011 will be the best since 1998, all thanks to a big one-time tax gain. The carmaker is expected to post a net income of around $20 billion in 2011, boosted by a $14 billion gain from eliminating a valuation allowance against deferred tax benefits, corporate tax specialist Robert Willens said.

According to a US filing, Ford no longer needs the reserve created in 2006 to cope with operating losses, since the company expects to post profits in the approaching years and to be able to use the tax benefits. The non-cash gain may hike the company’s net income in the fourth quarter of 2011 above the record of $1.8 billion set in 1999, Willens said.

The company posted $6.6 billion in net income for the first nine months of 2011, the most since 1998, mainly due to spiking sales of new models such as the Explorer. Ford posted its highest annual net income of $22.1 billion in 1998, when it sold the Associates.

The 2011 net profit would be the third straight year for CEO Alan Mulally, under whose term the company was able to improve the quality of its cars and to expand the model lineup with fuel-efficient offerings.

Ford had its dark moments in 2006 to 2008, when the US economy fell into recession, causing a drastic dive in vehicle sales. The company posted total losses of around $30.1 billion during the period. “Investors need to focus on the statement Ford is making and forget the big accounting journal entry,” said Willens, president of Robert Willens LLC, adding that through this, Ford makes a statement that it is very confident in its ability to generate large amounts of income for the foreseeable future.

Topics: ford

If you liked the article, share on:

Comments

Recommended

A lot of fans are excited with the news that Porsche could be unveiling a performance version of its Panamera 4 E-Hybrid plug-in hybrid during the 2017 Geneva Auto Show. ...
by - February 25, 2017
Tesla is finally setting a more “definite” schedule with regards to the official launch of the Tesla Model 3 electric car. A “limited production” is said to be slated to...
by - February 25, 2017
Are you a big fan of legendary boxer Mike Tyson, the former heavyweight world champion? Or are you a big fan of the iconic Ferrari F50? Either way, you will...
by - February 24, 2017
It seems that AM-RB 001 hypercar is not the only vehicle project that Aston Martin and Red Bull Racing has gone into. This time, don’t expect something as outlandish as...
by - February 24, 2017
The year 2018 marks the golden anniversary of Subaru of America. Of course, the company will celebrate 50 years of being at the helm of the brand’s crusade in North...
by - February 24, 2017
Facebook

Youtube Channel

Tip Us
Do you have a tip for us?
Did you film an important event?
Contact us
Newsletter
Subscribe to our newsletter!
Subscribe
Galleries