DETROIT—Ford Motor Co. reports third-quarter earnings on Wednesday, most likely the company's tenth straight quarterly profit. The carmaker is expected to overcome higher costs by adding customers and scaling back on discounts.
WHAT TO WATCH FOR: Ford's revenue and earnings could increase slightly from a year earlier. Ford was able to gain some customers and cut back on incentive spending thanks to earthquake-related car shortages at its Japanese rivals.
The company, which earned $5 billion in the first half, has lowered expectations for its second-half because it faces higher costs for materials like steel. It's also plowing hundreds of millions of dollars into new cars and factories in Asia, where it recently unveiled an ambitious growth plan. The spending in Asia was part of the reason Ford's second-quarter profit fell 8 percent.
The company, which had $14 billion in debt at the end of the second quarter, wants to lower that to $10 billion by mid-decade. A part of that plan, Ford paid down $1.8 billion on Sept. 15.
WHY IT MATTERS: After years of stumbles and big losses, Ford wants to show Wall Street that its finances are solid. Ford hopes to return its debt rating to investment grade by showing Wall Street that its balance sheet is stronger. A investment-grade rating would help lower borrowing costs.
The company is closing in on that goal. Standard & Poor's and Fitch Ratings both raised Ford's credit ratings last week, bringing the carmaker within one notch of investment-grade. The rating agencies cited the company's new contract with the United Auto Workers, which will limit Ford's labor costs by allowing the company to hire more workers at lower wages and pay profit-sharing bonuses instead of annual raises.
Investors also hope that continuing positive results will convince Ford to reinstate a dividend. Ford eliminated dividend payments in 2006.
EXPECTATIONS: Analysts polled by FactSet expect earnings of 45 cents per share on revenue of $29.9 billion.
LAST YEAR: In the same period a year ago, Ford reported earnings of 43 cents per share on revenue of $29 billion.