Ford posts surprise quarterly profit

By David Bailey and Soyoung Kim

DETROIT (Reuters) - Ford (F.N) posted a quarterly profit on Monday, defying Wall Street forecasts for a loss as it cut costs and gained market share, leading it to raise its 2011 outlook to "solidly profitable" from break-even.

Ford's shares surged over 9 percent as the surprising profit and increased outlook overshadowed an expected announcement later Monday that the United Auto Workers union has rejected a tentative cost-cutting deal with the automaker.

The results provided more evidence that Ford has distanced itself from U.S. rivals General Motors GM.UL and Chrysler, which have struggled to complete restructurings after emerging from government-funded bankruptcies earlier in 2009.

Ford seized North American market share from GM and Chrysler when they halted most production to prepare and execute their bankruptcy cases.

"We're creating a very strong business and we are not taking taxpayer money," Chief Executive Alan Mulally said on a conference call with analysts. "So the advantages clearly outweigh any potential disadvantage."

Ford reported $1.3 billion (792.8 million pounds) of positive cash flow in the third quarter, its first positive quarter since the second quarter of 2007, and forecasts positive cash flow in the fourth quarter. It burnt through $4.7 billion of cash in the first half of 2009.

The company also reported its first quarterly operating profit in its key home market of North America since the first quarter of 2005.

Ford said it was confident the global economy would be improving by 2011, but it added the near-term growth outlook "remains rather uncertain."