03 November,2009 09:53 AM IST | | Agencies
US automaker Ford Motor on Monday announced a net income of nearly $1 billion in the third quarter, surprising many analysts as weak economic conditions continue worldwide.
The $997 million profit marks the company's first operating profit since the first quarter of 2008, Ford said in a statement. The profit represented a $1.2-billion increase over the same quarter last year.
But the manufacturer was dealt a setback Monday after members of its chief labour union rejected a new contract that would have cut costs. Leaders of the United Auto Workers (UAW) union conceded defeat after 70 percent of their members blocked the deal over the weekend.
The labour deal, which included a six-year ban on strikes, would have given Ford concessions similar to those granted domestic rivals General Motors and Chrysler during their bankruptcies earlier this year. The UAW said it would not renegotiate the contract but would continue working with Ford to help the company remain competitive.
Ford said it reduced its structural costs by $1 billion in the third quarter, driven by lower manufacturing and engineering costs, bringing the total reduction in costs to $4.6 billion through the first nine months of 2009. That exceeded its full-year target of a $4-billion decrease.
"Our third-quarter results clearly show that Ford is making tremendous progress despite the prolonged slump in the global economy," Ford chief executive Alan Mulally said. "While we still face a challenging road ahead, our One Ford transformation plan is working, and our underlying business continues to grow stronger."
In August, Ford said it will work with 850 global suppliers by the end of 2009 - down from 1,700 at the beginning of the year - and will eventually cut the number to 750 as part of its long-standing restructuring plans.
"Ford now expects to be solidly profitable in 2011, excluding special items, with positive operating-related cash flow," Monday's statement said.
Ford's sales of light vehicles rose by 2.4 per cent in July, the first such gain in more than 20 months as the automotive market has seen some improvements.
