$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

Login or Create new account to add a comment!

Recommended

In Japan, Toyota stays in the limelight by always cooking up something new for its famous 86 sports car. A colour orange Toyota 86 performance edition is one that’s hard...
by - December 4, 2016
Back in 2009, Nissan first introduced the Nissan Leaf, the company’s first all-electric vehicle. LEAF stands for Leading Environmentally-friendly Affordable Family car and this particular EV has been considered as...
by - December 3, 2016
In the minivan segment, the 2017 Chrysler Pacifica is already impressive in terms of fuel economy figures – as rated by the United States Environmental Protection Agency. In fact, the...
by - December 2, 2016
Having a blacked-out Bentley Mulsanne Speed is already menacing by itself but by naming it as the Bamford X, it became all the more imposing. This model was made by...
by - December 2, 2016
We have good news for those who are waiting for the latest version of the Mazda CX-5 compact crossover. It was just unveiled in November at the 2016 Los Angeles...
by - December 2, 2016
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