Ford may report its largest first-quarter profit since 1998

Article by Christian Andrei, on April 24, 2011

Despite the rising prices of U.S. gasoline, analysts predict that Ford Motor Co. will report its largest first-quarter profit since 1998, with the sales of new fuel-efficient vehicle models identified as a contributing factor.

Specifically, the company’s profit, excluding certain items, may have increased from 46 cents a share a year ago to 50 cents per share this year, according to the average of the estimates of 14 analysts.

In addition, the average of three analysts' estimates as compiled by Bloomberg, revealed that net income may have reached $2.1 billion, which is the largest so far since its $17.6 billion profit in the first quarter of 1998.

The company’s sales of their more fuel-efficient models like the Explorer sport-utility vehicle and the Fiesta subcompact have risen as gas prices gained this year. In addition, The company’s CEO, Alan Mulally, has worked to boost fuel economy.

On the other hand, investors are still concerned that the rising fuel costs may adversely affect car sales as well as customer confidence, Fund Manager Gary Bradshaw at Hodges Capital Management said. "I don't feel as good as I would if I was filling up at the pump for $2.89 instead of $3.89 a gallon," he added.

His company owns approximately 200,000 Ford shares. However, Bradshaw remains confident that Ford can “weather the storm,” saying that it is better prepared this time. The increase in gas prices has been identified as a contributing factor to the 8.1 percent decrease in the shares of Ford in 2011 that was worsened by the company’ fourth-quarter profit trailing analysts' average estimate by 38 percent.

The company has also been struggling with the disruptions in the supply chain, just like any other entities in the auto industry, due to the March 11 tsunami and earthquake in Japan. Although the disasters have forced the company to halt production at its plants to conserve inventories, Mulally has stated that the events will not affect the company’s earnings.

Topics: ford, profit

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