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January 28, 2010    

Ford returns to profitability amid cost-cutting

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by Kay Murchie

US carmaker Ford has today reported its first annual profit since 2005 after a turbulent 12 months for the American car industry.

The company reported an annual net profit for 2009 of $2.27 billion (£1.4 billion) compared with a loss of $15 billion in 2008.

Meanwhile, for the fourth quarter of 2009, profit was $868 million - a significant improvement on the loss of $5.98 billion a year ago.

Sales in the three-month period grew $6.4 billion from the year earlier period to $35.4 billion, but sales for the 2009 year were $118.3 billion - a fall of $19.8 billion compared with the previous year.

The company embarked on a major cost-cutting exercise and reduced its mountain of debt and was the only one of the so-called ’Detroit Three’ to avoid bankruptcy last year.

General Motors and Chrysler both sought billions of dollars in Government loans and entered bankruptcy protection last summer.

Commenting on its results, Ford president and chief executive Alan Mulally, said: “While we still face significant challenges ahead, 2009 was a pivotal year for Ford and the strongest proof yet that our One Ford plan is working and that we are forging a path toward profitable growth.”

Carmakers in the US, like many others across the world, suffered from plummeting sales during the economic downturn.

Many Governments embarked on schemes which paid consumers to trade in their old cars.

The US Government’s Car Allowance Rebate System (CARS), branded the “cash for clunkers” scheme contributed to a rise in car sales.

However, the popular scheme, which gave motorists federal subsidies of up to $4,500 for trading in their old cars for new ones, ended last August.

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