TEXT-S&P: Ford Q1 results do not affect ratings

April 27 - Standard & Poor's Ratings Services said today that Ford Motor
Co.'s (BB+/Stable/--) first-quarter results have no impact on the rating
or outlook. Results were dominated by North America, where margins were stronger
than our full-year expectations at 11.5%, but most other regions were loss
making. Given the outlook for some of these other markets, North America could
be expected to generate the vast majority of Ford's profits and cash flow in
2012.

Automotive operating cash flow in the quarter was $900 million, up
sequentially from $700 million, but down from $2.2 billion year-over-year. For
the rating, we assume Ford will generate annual global automotive operating
cash flow of at least $2 billion-$3 billion each year in the next few years.

Ford's automotive debt rose slightly; gross automotive cash balances were
almost flat since year-end at a substantial $23 billion. Ford contributed $1.1
billion to the pension in the first quarter, and we assume Ford will
contribute another $2.4 billion in 2012--we would view this as equivalent to
debt reduction. The company also announced plans to offer lump-sum payouts to
salaried retiree and former employees to settle their pension obligation. This
event would not be expected to change the unfunded amount materially, but
would reduce assets and liabilities and so could be a modest positive over
time.

We view the sales recovery in the U.S. as solid even with the weak economic
recovery; prospects for 2012 are far brighter than in the European market,
which we view as very weak overall for the volume automakers, but with wide
variations by country. Our U.S. light-vehicle forecast for 2012 is 14.2
million units--the first time sales have been materially above our estimate of
replacement levels since 2008. We assume 2012 will be the fifth consecutive
year of lower auto sales in Europe. This year we expect year-over-year
production growth, which is an important driver of cash flow, in the mid- to
low-single-digits in North America and for declines in Europe--for example
Ford's European production in the second quarter is scheduled to be down 14.9%
year-over-year.

For a higher rating, we have previously articulated specific financial metrics
and several qualitative factors (see our full analysis on Ford, published
March 14, 2012, on RatingsDirect). The potential negative impact of the
economic, political and financial uncertainty in Europe on other regions is an
additional consideration for a higher rating.