Ford's Cash Needs, ‘Fragile’ Economy Hinder Dividend Restoration
Ford Motor Co., which rose to the lead in U.S. auto sales last month, still must contend with the possibility of a “fragile” economic recovery and won’t restore stock dividends soon, according to Chief Financial Officer Lewis Booth, Bloomberg reported.
Ford ended three years of losses in 2009 with net income of $2.7 billion and forecasts a pretax operating profit this year. The Dearborn, Michigan-based company passed General Motors Co. in February to lead U.S. monthly auto sales for the first time since 1998.
“There are some hurdles ahead of us and the most obvious hurdle is, how fragile is the economic recovery?” Booth said. Ford is planning for a “modest recovery,” he said.
Ford is unlikely to soon bring back dividends on its common and preferred shares because “we still have huge demands on our cash,” Booth said. “I wouldn’t want to raise people’s expectations or hopes.”
The last payout on the common shares was Sept. 1, 2006. Ford hasn’t paid a dividend on its Capital Trust II preferred stock since Jan. 15, 2009, and has said it would defer payments for as long as five years.
Ford forecast U.S. industrywide sales of 11.3 million to 12.3 million cars and light trucks this year, rising from 10.4 million in 2009, which was the lowest since 1982. The annual average from 2000 to 2007 was 16.8 million.
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