News Column

Navistar loss narrows on cost cuts

September 3, 2014

By Alejandra Cancino, Chicago Tribune



Sept. 03--Truck-and-engine maker Navistar International Corp. on Wednesday reported a smaller third-quarter loss due to cost-cutting initiatives that were able to offset flat sales.

Lisle-based Navistar said it lost $2 million, or 2 cents per share, compared to a loss of $247 million, or $3.06 per share, in the year-ago period.

Revenue was flat at $2.8 billion.

Analysts were expecting a loss of $59 million, or 7 cents per share, on revenues of $2.99 billion, according to Bloomberg.

Navistar said the results reflected increased production and improvements in warranty charges related to engines that failed to meet 2010 federal emission standards.

Earlier this summer, three lawsuits were filled in federal court in Chicago alleging those engines were defective and Navistar failed to disclose and correct the defect. The lawsuits seek class action status. Navistar said its deadline to respond to the lawsuits is September 10.

The company said revenue was hurt by a loss of military business and a drop in sales in Brazil, which is now in an economic recession.

The Lisle-based company is in the midst of a turnaround plan that has included outfitting some of its trucks and buses with engines from a competitor, closing plants and laying off workers. Navistar also combined its technology with that of competitor Cummins Inc. to make its own engines that meet federal emission standards.

So far this year, the company said it has reduced its year-over-year structural costs by $245 million, including $86 million in the third quarter. It's new cost-savings target for the year is $300 million, up from $250 million.

Navistar rose its industry forecast for sales of medium, heavy duty trucks and school buses to a range between 330,000 and 340,000 units this fiscal year. The previous forecast called for a range of between 300,000 to 335,000 units.

The company had forecasted a combined market share of 21 percent, up from 18 percent in 2013, but acknowledged on Wednesday that it would end the year with a market share "a point or two less than" 21 percent.

Troy Clarke, Navistar chief executive, emphasized in a conference call with analysts that the market share is improving as customers experience new products.

"We are making significant progress and we are building the right kind of momentum for the future," Clarke said. He later added, "The bad news is it's never fast enough."

The company's stock price rose by nearly 2 percent to about $39 per share in morning trading.

acancino@tribune.com

Follow @WriterAlejandra Follow @chibreakingbiz

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Source: Chicago Tribune (IL)


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