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Ford Expects to Resume Dividend

September 21, 2011
2 min to read


Ford Motor Co., which hasn’t paid a dividend in five years, expects to resume paying one in the “relatively near future,” and is no longer tying such a move to achieving an investment-grade debt rating.


“As our balance sheet continues to improve, we expect to resume paying a dividend,” Controller Bob Shanks said today at the Citi Global Industrials Conference in Boston. “We expect this to occur in the relatively near future.”

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Ford suspended its dividend in September 2006. Chief Financial Officer Lewis Booth said at a Sept. 9 investor conference that Ford won’t resume paying a dividend until after returning to an investment-grade credit rating. Standard & Poor’s rates Ford debt at BB-, three levels below investment grade, with a positive outlook, reported Bloomberg.


“We do not need to be investment grade before resuming our dividends,” Todd Nissen, a Ford spokesman, said in an e-mailed statement after today’s presentation.


The second-largest U.S. automaker earned $4.95 billion in the first half of the year, as fuel-efficient models like the Fiesta subcompact attracted buyers. Ford’s U.S. light-vehicle sales are up 12 percent this year through August, ahead of the industrywide gain of 10 percent.


The automaker is seeking to lower labor costs in contract talks with the United Auto Workers. The current contract covering Ford’s 41,000 U.S. hourly workers expired Sept. 14 and was extended. General Motors Co. reached a tentative agreement with the UAW Sept. 16, subject to ratification vote by workers.


Chief Executive Officer Alan Mulally raised prices this year to offset some of the $4 billion in higher costs the company expects in 2011, including manufacturing spending.

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Ford earned $9.28 billion in the past two calendar years after $30.1 billion in losses from 2006 through 2008. The automaker borrowed $23.4 billion in late 2006, putting up all major assets including its blue oval logo as collateral. That helped Ford avoid the bankruptcies and bailouts that befell the predecessors of GM and Chrysler Group LLC.


Ford slid 45 cents, or 4.3 percent, to $9.97 at 4 p.m. in New York Stock Exchange composite trading. The shares have fallen 41 percent this year.

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