Still "too early" to declare victory, says Bill Ford, right, who also hopes to see CEO Alan Mulally, left, stay on past 65.
Warning that it is still “too early” to declare a turnaround, Ford Chairman Bill Ford told shareholders the automaker is not yet ready to restore its dividend.
Nonetheless, Ford CEO Alan Mulally declared that the automaker will be “solidly profitable” this year, and that its recovery is occurring faster than anticipated, during the company’s annual shareholders meeting, in Wilmington, Delaware, today.
“It is very early days in our recovery,” declared William Clay Ford, Jr., explaining why the maker is not ready to restore its once-hefty payout to shareholders. But he added that a dividend “will be a topic for discussion…if we continue our progress.”
During their presentation to investors, the two executives painted a picture that could best be described as cautious optimism. While Ford is “clearly on a path now of profitably growing the business,” according to CEO Mulally, Chairman Ford stressed that, “We still have a lot of debt.”
Ford has been struggling to find ways to pay down that debt, including recent moves to convert some of it to equity.
But the maker has made strong progress on the balance sheet, reporting unexpectedly strong $2.1 billion first-quarter earnings, on top of the $2.7 billion profit from 2009.
On the sales side, the maker has gained 2.2 points of market share in 2010, with U.S. sales rising 32.3%, or nearly double the pace of the overall market.
But Mulally stressed that Ford’s recovery is not being driven by the improving economy or car market, but rather by steps the company itself has taken to cut costs and improve its products.
Despite the decision not to restore the dividend, “Shareholders have had pretty good news over the last year,” said Mulally, a former top Boeing executive. During the last 12 months, the compan’s stock price has more than tripled, though like other companies, it has slipped a bit in recent weeks, trading at $12.67 around noon on Thursday. (Since late 2008, Ford shares have increased more than ten-fold.)
The shareolders meeting took a generally positive tone, though a resolution calling for the elimination of the Ford family’s special, controlling B class stock garnered 29.2% of the vote – up from 19% a year earlier.
While some may question the founding family’s stewardship, there was clear indication of the support given Mulally, who has overseen an unexpectedly strong recovery since joining Ford less than four years ago.
There have been rumors swirling, for months, over Mulally’s future plans, especially as at 64 he is approaching the normal retirement age. The CEO has been quiet about his plans, but Bill Ford made it clear that the carmaker’s board would like Mulally to stay on, despite his age. “Sixty-five is the new 55,” said Ford.
If Mulally were to stay past 65 he’d have precedent at both of Ford’s cross-town rivals. Lee Iacocca only retired under mounting pressure from the Chrysler board. More recently, General Motors drew its new CEO Ed Whitacre, Jr., out of retirement. And GM’s Vice Chairman Bob Lutz only recently left the maker’s Renaissance Center headquarters at the age of 78.