DETROIT – Ford Motor Co. warned the company’s financial outlook could be hurt by the ongoing fallout from the March 11 Japanese earthquake and tsunami.

In a filing late Monday with the Securities and Exchange Commission, Ford said its financial outlook could be affected, reported The Detroit News.

Ford said that “should the supply of a key material or component from Japan be disrupted and an alternate supply not be available, we could have to reduce or temporarily cease production of vehicles, which could adversely affect our and Ford Motor Credit Company’s financial condition and results of operations.”

Ford said earlier this month it had taken into account potential parts shortages related to Japan both as it scheduled previously planned down weeks and as part of regular production planning process to match supply to current demand.

“We now expect that beginning in the last week of April and continuing into May, certain of our operations in the Asia-Pacific region (including certain of our joint venture operations) will be affected by shortages of components and vehicle kits as a result of the events in Japan,” Ford said. “Although this likely will require us and the affected joint venture affiliates to reduce or temporarily cease production of certain vehicles in the Asia-Pacific region, we do not expect this production disruption would have a material impact on our overall results.”

Ford said it is still working to find other sources of parts.

“Although we have no production facilities in Japan, we do obtain materials and components from suppliers located in Japan, and we are working closely with those suppliers to assess their production and shipping capabilities and to minimize any disruptions. We also are pursuing other sources of supply as necessary and practicable,” the company said.

The only immediate impact has been restrictions on ordering vehicles in certain paint colors for which an essential element is sourced from a plant in Japan.

Toyota Motor Corp. told dealers on Sunday that the company is producing cars and trucks at reduced levels in April and hasn’t set its production schedule for May through July. They warned dealers that new vehicle may be in limited supply.

DEARBORN – Ford Motor Credit Company reported net income of $2 billion in 2010, an improvement of $0.7 billion from earnings of $1.3 billion a year earlier. On a pre-tax basis, Ford Credit earned $3.1 billion in 2010, compared with $2 billion in the previous year.

The captive lender said the full year increase in pretax earnings is primarily explained by a lower provision for credit losses and lower depreciation expense for leased vehicles related to higher auction values, offset partially by lower volume and the non-recurrence of net gains related to unhedged currency exposure primarily from cross-border intercompany lending.

In the fourth quarter of 2010, Ford Credit’s net income was $367 million, a decrease of $85 million from a year earlier. On a pre-tax basis, Ford Credit earned $572 million in the fourth quarter of 2010, compared with $714 million in the previous year. The decrease in pre-tax earnings primarily reflected lower volume and the non-recurrence of lower lease depreciation expense related to lower gains as fewer leases terminated and the vehicles were sold.

“We are pleased with our 2010 performance, which enabled us to increase our planned distributions,” Ford Credit Chairman and CEO Mike Bannister said. “We expect results to be solid though more moderate in 2011 as we continue to provide strong support for Ford, our dealers and customers.”

On Dec. 31, 2010, Ford Credit’s on-balance sheet net receivables totaled $81 billion, compared with $93 billion at year-end 2009. Managed receivables were $83 billion on Dec. 31, 2010, down from $95 billion at year-end 2009. The lower receivables primarily reflected the discontinuation of Jaguar, Land Rover, Mazda and Volvo financing and lower industry volumes in recent years.

On Dec. 31, 2010, managed leverage was 6.7 to 1. Ford Credit distributed $1 billion to Ford Motor Company in the fourth quarter of 2010 for a total of $2.5 billion of distributions in 2010.

For full-year 2011, Ford Credit expects to be solidly profitable but at a lower level than in 2010, reflecting primarily the non-recurrence of lease depreciation expenses and credit loss reserve reductions of the same magnitude as 2010. At year-end 2011, managed receivables are anticipated to be in the range of $80 billion to $85 billion. Ford Credit expects to pay distributions to Ford Motor of about $2 billion in 2011.

Fitch Ratings has upgraded the issuer default rating for Ford Motor Company and Ford Motor Credit Company to ‘B-’ from ‘CCC’; the outlook remains positive.

The upgrade is based on an improved macroeconomic environment, Ford’s current cost/pricing/margin trends, product competitiveness, solid near-term product pipeline, liquidity position and cashflow prospects.

Fitch expects that Ford will turn cashflow positive in 2010 as an improving economic outlook and stabilizing retail financing availability allow the U.S. market to achieve an annualized run-rate of more than 11.5 million units in the second half of 2010.

An important factor in the upgrade is Ford Credit’s improving access to capital for retail and dealer financing. Fitch had previously cited the factors listed below as rationale for an upgrade.

These points have been largely met, and will remain the drivers of future upgrades:

• Industry sales rebound to an annual 12 million sales level more quickly than currently forecast;
• Ford’s products continue to hold or gain share;
• Inventory management at Ford and the industry allows Ford to hold or improve product prices;
• A clear path to positive free cash flow is projected;
• Liabilities continue to be managed or addressed;
• Independent access to capital by Ford Credit improves.

Fitch said Ford’s 1.2 percent gain in market share in 2009 demonstrated its competitiveness across product segments. Even in the event of a relatively flat rebound, Ford’s cost-cutting realizations, market share performance, and pricing indicate that any cash drains will be limited and can be very comfortably managed within Ford’s liquidity position.

Ford has been consistently disciplined in its production and inventory management, and this has allowed the company to demonstrate solid price performance through the first nine months of 2009. The step-changes to Ford’s cost structure will have largely played out in the first half of 2010 (although a new buyout program was recently announced) meaning that margin restoration will become increasingly dependent on price/volume improvement.

Although pricing will remain a challenge for the overall industry, Ford’s product competitiveness, technology features and healthy product pipeline over the next several years indicate that Ford should continue to outperform the industry. On the smaller end of its product lineup, where the consumer is migrating, Ford is exhibiting strong competitiveness.

Margins on these products are also expected to benefit from technology and content. Looking into 2011, it is assumed that the U.S. market could eventually reach an annualized sales level of 12.5 million units, at which point Ford’s free cash flow could reach $4 billion-$5 billion. Further upgrades could occur in 2010 if the outlook for U.S. economic growth and industry sales continues to improve.

Liquidity remains strong at approximately $24 billion. Ford has demonstrated steady access to capital, including $2.9 billion in convertibles at Ford, repeated unsecured debt issues at Ford Credit in the last six months, and two non-TALF dealer floorplan issuances in the amount of $2 billion.

The improved access to credit by Ford Credit (although at a cost) is a primary factor in the upgrade. Ford will be receiving a total of $5.9 billion in loans from the Department of Energy. With improved liquidity prospects, Ford should be in a position in 2010 to begin the long process of repairing its balance sheet.

Ford’s retention of Ford Credit is a positive to the company’s credit and earnings profile, but the company will remain at a competitive disadvantage to transplant competitors with better access to capital and a lower cost of capital.

The upgrade of Ford Credit and its related subsidiaries reflects the strong linkage between the ratings of Ford Credit and Ford. In addition, Ford Credit has demonstrated the ability to finance its business independent of government programs on both a secured and unsecured basis, one key element driving the upgrade of Ford.

With approximately $24 billion available, Ford Credit’s liquidity position is considered strong for the current rating.