(Adds CEO comment, market prices.)
By Jeff Bennett
Of DOW JONES NEWSWIRES
DETROIT -(Dow Jones)- Ford Motor Co. (F) reported a third-quarter profit Monday and firmed its outlook for 2011 while taking a cautious stance on 2010.
The auto maker cited the turnaround in its core North American unit, though it said continued gains would be more than offset by an expected slide in European sales next year as government-backed incentives came to an end.
Ford Chief Executive Alan Mulally called the third quarter a "tremendous prove point" for a strategy centered around cost cutting and new product roll-outs based on global auto platforms.
Ford's North American unit recorded its first operating profit in more than four years as the world's fourth-largest auto maker boosted pricing and market share.
Group margins are expected to dip next year, though, because of higher material and funding costs.
A third-quarter profit of $997 million, or 29 cents a share, beat market expectations, and compared with a year-ago loss of $161 million, or 7 cents a share.
Ford shares rose as high as $7.84 and were recently up 9% at $7.63. Bond spreads also tightened as two ratings agencies put the company on review for a possible upgrade. DBRS said Ford had enough cash to last two years.
The turnaround in Ford's North America operations--which burned through $7.7 billion in cash in the third quarter of 2008--was central to evidence that Ford may have turned the financial corner and will meet its goal of turning a full-year profit in 2011.
Ford raised its 2011 guidance for the total company and its North America operations from being "breakeven or better" to "solidly profitable" on a pretax basis, excluding special items with positive automotive operating-related cash flow.
Mulally said he wanted "more data" before providing 2010 guidance.
"While the company has confidence that the global economy will be improving, the near-term growth outlook remains rather uncertain," Mulally said Monday during a conference call.
He also hinted at more production and job losses in Europe, saying he will focus on adjusting output to demand instead of raising sales incentives.
Ford has culled $4.6 billion in costs during the first nine months, including $1 billion eliminated in the third quarter alone. The company now expects to eliminate a total of $5 billion in costs.
However, Ford is still carrying $26.9 billion in debt, with $1.6 billion maturing over the next year. Another $7 billion to $8 billion will be added to the overall debt due to payments made to the United Auto Workers retirement fund.
The UAW is also expected to announce Monday a rejection of contract concessions by the union's rank and file. Mulally discounted the rejection, saying the auto maker would still be competitive.
Ford executives had said, since contract concession talks first began, that the auto maker needed parity with the concession given to General Motors Co. and Chrysler Group LLC.
-By Jeff Bennett, Dow Jones Newswires; jeff.bennett@dowjones.com; 248-204-5542