NEW YORK (CNNMoney.com) -- Ford Motor Co. reported a net profit in the second quarter thanks to efforts to reduce its debt. But the company posted another operating loss during the second quarter due to a continued slump in sales.
Still, that loss was much smaller than a year ago and Wall Street's forecasts.
The company converted much of its debt to equity during the period through an offer to shareholders. That caused Ford to post a one-time gain of $2.8 billion, which allowed Ford to report net income of $2.3 billion, or 69 cents a share in the quarter. Ford posted a net loss of $8.7 billion a year ago.
But Ford, the only U.S. automaker not to file for bankruptcy during the second quarter, reported an operating loss of $638 million, or 21 cents a share in the period, excluding special items. That's an improvement over the 63 cents a share Ford lost on that basis in the year ago period.
Analysts surveyed by earnings tracker Thomson Reuters were predicting an operating loss of 48 cents.
Ford said that revenue fell 29% to $27.2 billion, as vehicle sales in the U.S. tumbled 23% in the quarter. But sales also beat forecasts. Analysts were expecting a drop of 36% to $24.8 billion.
Shares of Ford gained more than 5% in pre-market trading following the report.
The company's auto operations burned through $1 billion in the period, but that too was better than the $3.7 billion in cash it burned through in the first quarter of the year.
Ford said it has about $21 billion in cash on hand at the end of the quarter following its debt for equity swap as well as its decision to tap its $10 billion lines of credit in the first quarter.
That cash position allowed the automaker to avoid a government bailout at the same time that the Treasury Department was pumping billions of dollars into rivals General Motors and Chrysler Group to keep those companies alive throughout their bankruptcy reorganizations.
Ford said it remains on track to track to achieve or beat all of its 2009 financial targets, and that it should be able to cut $4 billion in costs this year.
The company also reiterated that it expected its North American auto operations would break even or make money by 2011 and stop burning through cash by that time.
"While the economic environment remains challenging, I am more convinced than ever we are on the right path to create a healthy and profitably growing Ford," said Ford CEO Alan Mulally in a statement.
The company also said it expects to continue gaining market share in both the United States and Europe this year. Through the first half of 2009, Ford accounted for 16.1% of U.S. auto sales, up from 15.5% in the year-earlier period.
Ford, which has been trailing GM and Toyota Motor in annual U.S. sales for the past few years, has been pulling closer to Toyota recently. In fact, Ford sold more vehicles in the U.S. than Toyota in the second quarter.
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