Fitch Ratings Services has assigned 'BBB-' rating on
Ford Motor Co.
) proposed senior unsecured notes due in 2043 and Issuer Default
Rating (IDR). Fitch conferred a stable outlook on the rating.
FORD MOTOR CO (F): Free Stock Analysis Report
GENERAL MOTORS (GM): Free Stock Analysis
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The rating was based on the company's strong liquidity position,
lower pension obligations and higher profitability from North
American operation. Moreover, the competitive product portfolio
and lower cost structure of the company helps it to overcome any
cyclical and secular pressures in the global auto market.
The company's cash balance has improved over time. Ford had cash
and marketable securities of $24.1 billion as of September 30,
2012, up from $20.8 billion in the corresponding period a year
ago. However, the company is under pressure owing to the
uncertainty in the automobiles market. Declining demand in
Western Europe and sluggish growth in the emerging markets will
be challenging for the company.
Total Automotive debt remained unchanged year over year at $14.2
billion at the end of third quarter of 2012. However, the
proposed notes will increase the company's long-term debt.
Recently, Ford made an offering of $2 billion 4.75% senior
unsecured notes due in 2043. The proceeds from this offering will
be utilized to repay the existing debt and make contributions for
the pension plans. According to the Fitch Ratings Services, the
company's initiative of allocation of proceeds to its pension
plan will reduce pension liabilities without increasing debt.
Ford, the largest automobile producers in the world, posted a
17.6% rise in earnings per share to 40 cents in the third quarter
of the year from 34 cents a year ago, driven by impressive
results in its North American operation and, to some extent, its
Asian operation. With this, the company has also surpassed the
Zacks Consensus Estimate by 10 cents per share. Total profit rose
15.6% to $1.6 billion from $1.4 billion a year ago.
However, total revenue in the quarter slid 3.0% to $32.1 billion
due to lower revenues in South America, Europe and Financial
Services operations that offset the marginal improvement in
revenues in North America and Asia. However, revenues were higher
than the Zacks Consensus Estimate of $31.0 billion for the
Ford, whose cross-town rivals include
General Motors Company
), maintains a short-term Zacks #3 Rank (Hold) and a long-term