Ford Motor Company (F) has recently won approval for $250 million of working capital loan guarantee from the Export-Import Bank of the United States. The loan facility will finance about $3.1 billion of export sales for over 200,000 vehicles to Mexico and Canada.
Using this loan guarantee, Ford will export several models including Explorer, Escape, Expedition, E-Series Van, Focus, Ford F-150, Lincoln MKS, Navigator and Taurus.
The actual finance will be provided by the Private Export Funding Corporation, the organization engaged in providing financial assistance to U.S. exports. Ford is required to pay off the loan amount along with the interest and fees within a time span of one year.
Ford’s Kansas City Assembly Plant in Claycomo, which produces models such as Escape and Ford F-150, will grab the biggest benefits. Michigan-based Ford has decided to use this plant mostly to meet the growing export demand worldwide.
Also, the Missouri state government has decided to provide Ford with incentives worth $100 million to encourage the company to invest more in the Kansas City Plant and create jobs.
All other U.S. manufacturing plants of Ford will benefit from this export boost as well, since the company has selected the U.S. plants for manufacturing the export models.
Moreover, as a result of Export-Import Bank’s loan guarantee, approximately 650 direct suppliers (providers of auto parts and engine components for the export models) and around 1,000 indirect (other services) suppliers of Ford in the country will be able to maintain their global competitive position.
A quick look at the past few years will show that Asian car manufacturers -- mainly those in China and Japan -- have pushed the U.S. car manufacturers to the backseat. So the new policy of expanding business may help Ford generate additional revenues.
Ford’s second quarter 2010 net income of 61 cents per share was substantially higher the Zacks Consensus Estimate of 40 cents. Operating profits were $2.9 billion, an improvement of $3.5 billion from the year-ago quarter. The company received good response from the Asia-Pacific markets, mainly India (where quarterly sales tripled) and China (which faced a 20% increase in sales).
We recommend the shares of Ford Motor as “Strong Buy” (Zacks #1 Rank) in the short term and “Outperform” in the long term.
FORD MOTOR CO (F): Free Stock Analysis Report
Zacks Investment Research
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The actual finance will be provided by the Private Export Funding Corporation, the organization engaged in providing financial assistance to U.S. exports. Ford is required to pay off the loan amount along with the interest and fees within a time span of one year.
Ford’s Kansas City Assembly Plant in Claycomo, which produces models such as Escape and Ford F-150, will grab the biggest benefits. Michigan-based Ford has decided to use this plant mostly to meet the growing export demand worldwide.
Also, the Missouri state government has decided to provide Ford with incentives worth $100 million to encourage the company to invest more in the Kansas City Plant and create jobs.
All other U.S. manufacturing plants of Ford will benefit from this export boost as well, since the company has selected the U.S. plants for manufacturing the export models.
Moreover, as a result of Export-Import Bank’s loan guarantee, approximately 650 direct suppliers (providers of auto parts and engine components for the export models) and around 1,000 indirect (other services) suppliers of Ford in the country will be able to maintain their global competitive position.
A quick look at the past few years will show that Asian car manufacturers -- mainly those in China and Japan -- have pushed the U.S. car manufacturers to the backseat. So the new policy of expanding business may help Ford generate additional revenues.
Ford’s second quarter 2010 net income of 61 cents per share was substantially higher the Zacks Consensus Estimate of 40 cents. Operating profits were $2.9 billion, an improvement of $3.5 billion from the year-ago quarter. The company received good response from the Asia-Pacific markets, mainly India (where quarterly sales tripled) and China (which faced a 20% increase in sales).
We recommend the shares of Ford Motor as “Strong Buy” (Zacks #1 Rank) in the short term and “Outperform” in the long term.
FORD MOTOR CO (F): Free Stock Analysis Report
Zacks Investment Research
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