Ford: Moving Quickly On Investment Grade Goals
Ford Motor Co could reach its target of an investment grade credit rating more quickly than some outside observers might have thought, Executive Chairman Bill Ford said on Tuesday.
The automaker, which expects a solid profit in 2010 and also to build on that profit in 2011, this year has sharply cut a heavy debt load it built to support a restructuring that has included a focus on its car lineup, reported Reuters.
Ford said executives realized from the start it was important once the company had regained its footing to reach investment grade metrics and rebuild its balance sheet.
"We are doing that and we are doing that much quicker than most people thought we could," Ford told reporters during an event at the automaker's Michigan Assembly Plant.
Ford has reported profits in six consecutive quarters as the U.S. auto industry has started a gradual sales recovery from its worst downturn in decades. As a result of its turnaround, the automaker has been able to cut debt more quickly than outside observers would have expected, Ford said.
It expects continuous improvement in its goal to return to investment grade from 2010, Ford said.
"We are along this continuum over the next few years shooting for that," Ford said of investment grade. "It's looking more realistic sooner rather than later."
Ford borrowed more than $23 billion in late 2006 to support the restructuring. It avoided the bankruptcies that hit General Motors Co and Chrysler last year, but has a much higher debt load than its rivals as a result.
Through a series of moves that have included note offerings and cash payments, the automaker has reduced the debt in its automotive operations by about $12.8 billion in 2010, cutting its annual interest expenses by $1 billion.
The automaker has no plans at this point for an equity offering to reduce debt, and expects over the longer term to consider reinstating the dividend, Ford said.
"Obviously that is something, once our balance sheet gets cleaned up, that we will be looking at," Ford said of the dividend that was eliminated in 2006.
The priority has been getting back to investment grade and getting the balance sheet in order, Ford said.
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