Ford Motor Co expects earnings improvement in 2011 after solid profits in 2010 as its turnaround gains traction, executives said at its annual meeting of shareholders on Thursday.
Ford Chief Executive Alan Mulally said improvement in the economy globally and a strong new vehicle lineup gave him confidence in expecting a continuing improvement in 2011.
It's a slow gradual recovery, especially in the United States, but very solid fundamentally, Mulally told reporters after the meeting.
Ford, which posted a profit in 2009, is focused on reducing a high debt load, but would make dividend reinstatement a topic for future discussion after it addresses its balance sheet, Executive Chairman Bill Ford Jr. said.
It's very early days in our recovery ..., Ford said during the meeting. The most important thing we can do as a company is to get our balance sheet strengthened and in order.
At some point in the future if we continue our progress, and we expect that we will, that will be a topic for discussions, Ford said of the dividend.
The automaker's stock price has quintupled since the end of 2008 leaving stockholders with something to hang onto even without a timeframe for a dividend. The dividend was eliminated in 2006 as Ford started its turnaround plan.
In April, Ford said it expects a solid pretax profit in 2010 excluding special items. Its previous forecast was 2011 profit on that basis. The automaker posted losses of $30 billion from 2006 through 2008.
Ford lowered its break-even point in a restructuring that avoided bankruptcy, while gaining most of the cost cuts that Detroit-based rivals General Motors Co and Chrysler Group LLC achieved in government-supported bankruptcies.
Ford has a far heavier debt load than GM or Chrysler after taking a more than $23 billion home improvement loan in late 2006 and had $31.3 billion of automotive debt after a repayment in April. It expects debt reduction efforts to accelerate as it produces positive cash flow and profits.
MULALLY CAN STAY 'AS LONG AS HE WOULD LIKE'
Executives have credited Mulally with a relentless focus on executing the turnaround and tying together operations globally to reduce costs.
Mulally turns 65 this year, his fourth with Ford after joining from Boeing Co in 2006, and the automaker has no hard policy on executive retirement ages.
Needless to say, Alan has been absolutely superb for this company and we would like him to stay as long as he would like to be here, Ford said during the meeting.
In April, Ford told Reuters in an interview that Mulally would be around for a while and that the automaker has a stable of capable in-house successors when he does retire.
Shareholders approved a plan Ford adopted last September to preserve tax benefits accrued due to losses over the last several years by limiting the potential for a technical change in control that could severely limit their use.
The use of those tax benefits would be severely restricted if shareholders of more than 5 percent stakes collectively increased their Ford ownership to more than 50 percentage points over a rolling three-year period.
There would not be an actual change in control under that scenario, given the Ford family's ownership of Class B shares that confer a 40 percent voting block.
Shareholders rejected a proposal to revisit the two-tier share structure that give the Ford family control of the automaker through nearly 71 million Class B shares. Family members also hold some of the 3.3 billion common shares.
The shareholder proposal had been raised by shareholder activist Ray Chevedden and a family trust and has been on the meeting agenda for several years.
Shareholders also rejected a proposal raised by Trillium Asset Management for greater disclosure of Ford's political spending. The automaker spent $7 million for federal lobbying last year, but Trillium was seeking more information about its support for trade organizations.
Ford shares were up less than 1 percent at $12.75 Thursday on the New York Stock Exchange.
(Reporting by David Bailey; Editing by Derek Caney, Dave Zimmerman)