Ford turnaround picks up speed

NEW YORK (CNNMoney.com) -- Ford Motor continued its successful turnaround as better-than-expected sales and profits easily outdistanced expectations and reversed the operating loss of a year ago.

The automaker earned $2.7 billion, or 68 cents a share, excluding special items. The consensus forecast of analysts surveyed by Thomson Reuters was for earnings of 40 cents a share, and Ford easily topped even the most bullish forecast of a 48 cent a share profit.

The results were the best quarterly results for Ford in six years and marked the fourth straight quarterly operating profit for the company, which had suffered more than than four years of steady losses before it returned to profitability in the second half of last year.

Ford was the only major U.S. automaker not to go through bankruptcy in 2009, but its year-ago results were still hurt by overall weakness in the U.S. economy and one of the worst quarters of overall auto sales on record. It suffered an operating loss of $638 million, or 21 cents a share, in the year-earlier period.

The company has been steadily gaining market share over the last year, with the introduction of critically-acclaimed new vehicles. A year ago it was behind both General Motors and Toyota Motor (TM) in U.S. sales, but it moved back in front of Toyota this year.

Even better results ahead. "We are ahead of where we thought we would be despite the still-challenging business conditions," said Ford President and CEO Alan Mulally in a statement. "We remain on track to deliver solid profits and positive automotive operating-related cash flow for 2010, and we expect even better financial results in 2011."

The company posted net income of $2.6 billion, or 61 cents a share, compared with $2.3 billion, or 69 cents a share, in the year-earlier quarter, when a conversion of debt to equity gave its bottom line a one-time boost.

Charges in the most recent quarter associated with the plans to discontinue the Mercury brand were partly offset by a gain from Ford's sale of its Volvo unit to Chinese automaker Geely.

Revenue at Ford, the No. 2 automaker in terms of vehicles sold in the United States, rose 17% to $31.3 billion, up from $26.8 billion a year ago, topping forecasts of sales of $29.8 billion. The number of vehicles sold worldwide rose 19% to 1.4 million.

Experts were impressed with Ford's results. Shelly Lombard of debt rating service Gimme Credit, said that while Ford's strong first quarter results were party due to stumbles at Toyota, GM and other competitors, its ability to do even better in the second quarter was a sign of strength at the company itself.

"Ford appears to have more operating momentum [than GM]," she wrote. "If it can keep turning that momentum into cash, it should be able to reach its goal of zero net debt this year."

She cautioned that success was not guaranteed, given the uncertainty about the strength of the overall U.S. economy. But Erich Merkle, president of Autoconomy.com, an industry analysis firm, said he believed that better times were ahead, given Ford's success amid still-weak U.S. auto sales.

"I was anticipating them to beat forecasts because their production was very strong and they were strong on truck sales," he said. "But this far exceeded anything I was looking for."

Shares of Ford (F, Fortune 500) rose 5% in Friday trading. Shares have climbed 73% in the last 12 months through the close of trading Thursday, although they have slipped 17% from their 52-week high in April.