(Reuters) – Ford Motor Co (F.N) is poised to report its biggest annual profit in 13 years on Friday after an accounting change that signals the No. 2 U.S. automaker’s belief it can remain profitable.
The automaker will post a one-time gain of about $13 billion after it eliminates a tax reserve created in late 2006 when Ford was in the early stages of a turnaround under Chief Executive Alan Mulally.
The tax-related boost may push Ford’s 2011 net income to more than $20 billion, its best annual profit since 1998, when it earned more than $22 billion during the SUV boom and after it spun off its stake in Associates First Capital Corp, a consumer and commercial lender.
The elimination of the tax reserve, known as a valuation allowance, reflects Ford’s confidence that its financial prospects have improved markedly under Mulally, who is credited with steering Ford from collapse.
Excluding the one-time gain, Ford is expected to earn $1.84 per share for 2011, according to the average analyst estimate provided by Thomson Reuters I/B/E/S.
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