Ford's (F) fortunes are based on its ability to get its car business turned around before it runs low on cash. Vehicle sales in the United States, running at a rate of less than ten million a year, may not recover fast enough to assure that Ford has a future that does not include raising more money.
Ford had a pleasant surprise for the markets this morning as it earned 69 cents a share in the second quarter on $27.2 billion in revenue. Sales dropped from $41.1 billion in the same period a year ago. With debt restructuring costs backed out, Ford's operating loss was $638 million or a loss of 21 cents per share. In the same period a year ago, Ford lost $1.4 billion or 21 cents a share. Results bested Wall Street's estimates.
The most critical piece of news was that the automaker ended the second quarter with automotive gross cash of $21 billion. The company's operating-related cash outflow was $1 billion, an improvement of $2.7 billion from the first quarter of 2009.
Ford is clearly on pace to make money, if it can get an even modest boost from the global economy. The company said it is on track to cut $4 billion in expenses this year, and is sticking to its prediction that it will break even or better in 2011.
While Ford gained market share in the the U.S., Canada and Mexico, moving to 16.4 percent of the market, the real story of Ford's second quarter is sales overseas. In Europe, Ford market share rose a half a percentage point to 9.0 percent, its highest second quarter level in the past 10 years. Ford's share of the South American market improved one point to 10.4 percent. In the Asia Pacific Africa region, Ford market share was up one-tenth of a point
While Ford lost $851 million on its North American operation, it made $86 million in Latin America, $138 million in Europe and had a very modest loss of $25 million in Asia.
Ford may have to wait out the U.S. market, but it is doing well enough outside the U.S. to almost assure that it will meet its 2011 goal of returning to profitability.
Douglas A. McIntyre is an editor at 24/7 Wall Street.