Ford Credit Posts Net Income of $98 Million
DEARBORN, Mich. — Ford Motor Credit's chief executive officer said he expects the market to remain "extraordinarily challenging."
For the third quarter, the company reported net income of $95 million, down $239 million from earnings of $334 million a year earlier. On a pre-tax basis, Ford Credit earned $161 million, compared with $546 million in the previous year.
The decrease in pre-tax earnings primarily reflected the non-recurrence of net gains related to market valuation adjustments to derivatives, a higher provision for credit losses and lower volume, officials explained. These were offset partially by higher financing margin.
In the third quarter of 2008, pre-tax earnings would have been $185 million, excluding net losses of $24 million related to market valuation adjustments to derivatives. In the third quarter of 2007, pre-tax earnings would have been $341 million, excluding net gains of $205 million related to market valuation adjustments to derivatives.
"We were able to earn a pre-tax operating profit in the third quarter despite increased pressure from the market," pointed out Mike Bannister, Ford Credit's chairman and CEO.
"We expect the marketplace to remain extraordinarily challenging. To weather these conditions, we will continue to focus on our dealers and customers through the factors we control — our strong credit practices, solid risk management and exceptional account servicing," he added.
As of Sept. 30, Ford Credit's on-balance sheet net receivables totaled $127 billion, compared with $141 billion at year-end 2007.
Managed receivables came in at $130 billion, down from $147 billion on Dec. 31, 2007.
"The lower receivables were more than explained by lower North America receivables, the impact of divestitures and alternative business arrangements, changes in currency exchange rates, and the second-quarter 2008 impairment charge for North America operating leases," officials explained.