Pruitt Ford

DETROIT - The Ford Motor Company earned $2.7 billion in 2009 and said Thursday that it now expected to be profitable in 2010 as well.

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David Zalubowski/Associated Press

Ford reported its first annual profit in four years.

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The profit for 2009, equal to 86 cents a share, was a swing of $17.5 billion from 2008, when the company lost $14.8 billion. It is Ford's first full-year profit since 2005.

The company ended 2009 with $25.5 billion in cash reserves, nearly twice the $13.4 billion it had at the start of the year.

It also expects positive cash flow and an operating profit in 2010, which is a year sooner than executives had previously said the company would become consistently profitable.

"It really is pivotal and historic," Ford's chief executive, Alan R. Mulally, said on a conference call with analysts and reporters, "that during the worst economic recession in 30 or 40 years, because of the strength of the plan we put in place a few years ago, we were not only able to survive but also to create a foundation that is delivering now profitable growth during that year."

In the fourth quarter, Ford earned $868 million, or 25 cents a share, compared with a loss of $6 billion, or $2.51 a share, in the same period of 2008.

It was profitable in every region, including North America for the second consecutive quarter. North America has been the greatest source of difficulty for all automakers, but it was Ford's most profitable region in the fourth quarter, with pre-tax earnings of $707 million, excluding one-time items. Ford still lost $1.6 billion in North America on the year.

Ford Europe suffered from a sales slowdown there, however, dropping to a loss of $226 million in 2009 from a $970 million profit in 2008. Volvo, the Swedish brand that Ford has agreed to sell to the Chinese carmaker Geely, was barely profitable in the fourth quarter but lost $934 million on the year.

The carmaker's financing arm, Ford Motor Credit posted a 2009 profit of $1.9 billion, after losing $495 million in 2008.

Ford's fourth-quarter revenue was $35.4 billion, up $6.4 billion from a year ago. For all of 2009, revenue fell $19.8 billion, to $118.3 billion.

Ford said it cut its structural costs by $5.1 billion in 2009, $1 million more than it had planned.

The full-year earnings mean Ford's 43,000 hourly employees will receive profit-sharing checks averaging $450, the company said.

To be sure, Ford is not in the clear yet. It still has more debt than cash and than its competitors carry on their balance sheets. Ford owed $32.3 billion at the end of 2009, most of which it borrowed in 2006 before the credit markets tightened, forcing G.M. and Chrysler to rely on the government for help.

"We're acutely aware that we still have too much debt on our balance sheet," Ford's chief financial officer, Lewis I. Booth, said. "The best way to improve our balance sheet is to improve the fundamental profitability of the company to generate positive operating cash flow to enable us to pay down our debt."

Ford happily differentiated itself from General Motors and Chrysler in 2009 by not taking government loans and filing for bankruptcy protection. That helped the company improve its reputation and win new customers.

Ford increased its market share in the United States for the first time since 1995, even as it raised profit margins by reducing customer discounts.

Lately, Ford has been a bright spot in an industry still besieged by fairly dismal selling conditions. It won both the North American car and truck of the year awards at this month's Detroit auto show. Shares of Ford surged to more than $12 this month, from a low of $1.50 in February 2009.

Ford is among the carmakers that analysts expect to benefit most from the troubles at Toyota, which has recalled 5.3 million vehicles since November and this week temporarily stopped selling eight models because of a problem with the accelerator pedals.