Ford Motor Co is expected to post its biggest annual profit in a decade on Friday, after lowering operating costs and increasing sales to make it No. 2 in the U.S. market.

Ford's anticipated annual operating profit of about $8 billion would be its best showing since a $10.2 billion profit in 2000, when U.S. industry auto sales were 33 percent higher.

Making profit at a lower sales volume has been one of the keys to the company's strategy since Chief Executive Alan Mulally arrived in October 2006.

It is the second straight year of profit for Ford, which showed a loss of $30 billion from 2006-2008.

Mulally and Executive Chairman Bill Ford have said that now the company has gone from fighting for its survival to expanding profitably around the globe.

Investors will look on Friday for updates from Ford executives on steps toward a return to an investment-grade credit rating, which it has not had since May 2005.

Ford cut its net automotive debt in 2010. After it paid debt to a retiree health care trust fund for the United Auto Workers, its key automotive operations had a debt of $22.8 billion and cash of $20.3 billion.

The company said it will be profitable in 2011 but at a lower level than 2010.

Ford has not forecast when it would return to investment grade. Ratings agencies have raised its grade recently as Ford's debt has fallen, but it remains two notches below investment grade.

The reshaping of Ford was funded by mortgaging most of the company's assets to borrow $23.5 billion. The move allowed Ford to finance new product development while not having to accept the life-saving government bailouts taken by its U.S. rivals General Motors Co and Chrysler Group.

Analysts expect the company to show a quarterly profit of 48 cents per share, according to 17 analysts polled by Thomson Reuters I/B/E/S. That would mean a quarterly profit near $1.7 billion on revenues of $30.57 billion and an annual profit near $8 billion.

The range of estimates are from a high of 58 cents per share and a low of 36 cents per share.

AUTO SALES UP

Ford's U.S. sales grew 19.5 percent in 2010, versus an industry that grew 11 percent.

Morningstar analyst David Whiston said he will be watching Ford's 2011 forecast closely for signals of the automaker's expectations for commodity prices that could increase sticker prices for its models. He's also looking to see how high Ford thinks gasoline prices will rise in 2011.

Can Ford meaningfully grow its car model mix should gas prices rise, is a key question, said Whiston. I know they've made strides by introducing new small cars like the Focus and the Fiesta, but their U.S. sales are still skewed toward trucks.

Ford's U.S. sales of 1.93 million for 2010 were 64 percent trucks, which include SUVs. Overall, U.S. auto industry sales were about half cars and half trucks in 2010.

(Editing by David Gregorio)

Ford Motor Company