Ford Credit Back in the Black But Expects Second Half to Show Less Strength
DEARBORN, Mich. — In a positive turn of events, Ford Credit announced today that it has posted net income of $413 million for the second quarter, a significant improvement of $1.8 billion from a net loss of $1.4 billion last year.
On a pre-tax basis, the company said it earned $646 million for the period, compared with a loss of $2.4 billion in the prior year.
"We are pleased with our second-quarter results as market conditions remain challenging around the world," explained Mike Bannister, chairman and chief executive officer. "With our solid business fundamentals and our focus on prudent lending, sound risk management and high-quality servicing, we continue to provide valuable support to Ford Motor Co., its dealers and its customers."
As of June 30, Ford Credit said its on-balance sheet net receivables came in at $99 billion, compared with $116 billion at the end of 2008. Managed receivables, meanwhile, were $100 billion, down from $118 billion as of Dec. 31 of last year.
"The lower receivables primarily reflected lower North America and Europe receivables, mainly due to lower industry volumes, lower dealer stocks and the transition of Jaguar, Land Rover and Mazda financing to other finance providers," officials indicated.
On June 30, the company had a managed leverage of 8.4 to 1. Also, executives said that during the second quarter, Ford Credit completed a cash tender offer, purchasing $3.4 billion principal amount of its unsecured, nonconvertible debt securities for an aggregate cost of $1.1 billion, including transaction costs.
Ford Credit reported that it transferred these debt securities to Ford Motor Co. in satisfaction of $1.1 billion of tax liabilities to Ford Motor Co.
Looking ahead, company officials said they expect that second-half results will be lower than the first half of the year.
"Ford Credit does not expect the net gains related to unhedged currency exposures or improvements in lease residual losses in the amounts experienced in the second quarter of 2009 to continue," executives highlighted. "A continuing decline in receivables will also contribute to lower second half 2009 results."