Ford Has 'Options' to Improve Credit Rating, Mulally Says
DETROIT - Ford Motor Co. sees "great options" to improve its balance sheet and return to an investment-grade credit rating as its financial results continue to strengthen, CEO Alan Mulally said.
Mulally affirmed forecasts for a "solid profit" in 2010 and said cost savings from using common global platforms, growing market share and improving pricing would deliver greater profits in 2011 and beyond, Reuters reported.
"The No. 1 strategy we're pursuing is to continually improve operational performance. That allows us to accelerate [balance sheet] improvement. It gives great options to do that," Mulally told analysts in a meeting that was webcast.
"We are going to accelerate improvement to get back to investment grade, which is our intent, as quickly as we can," he said.
Ford was first lowered to junk status in 2005 by both Moody's Investors Service and Standard and Poor's. Earlier this month, Moody's raised Ford to B1, its fourth level below investment grade. Standard & Poor's last month kept its B-minus credit rating on Ford, six notches below investment grade, but revised its outlook to “positive” from “stable.” That indicates better than a one-in-three chance of upgrade during the next year.
The No. 2 U.S. automaker, which has divested Jaguar, Aston Martin and Land Rover and is completing the sale of Volvo, continues to evaluate its remaining brands, Mulally said, while declining to comment on the future of its struggling Mercury brand. Sources familiar with the matter said Thursday that Ford is considering a plan to drop Mercury, which Henry Ford's son, Edsel, created during the Great Depression. Mercury's product and marketing investment has decreased in recent years, and its sales have plunged 74 percent since 2000.
"We continue to look at our portfolio and brands as any good business does, but we have nothing new to add today," Mulally said.
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