Engine Repairs Cost Navistar
Navistar, Lisle, Ill., also said March 8 that it would use emissions credits that would allow it to continue selling engines through this year in California and nine other states that follow California’s emissions plan, but it would pay penalties to sell engines in 40 other states.
Daniel Ustian, Navistar chairman and CEO, said Navistar is including $25 million in its financial projections to pay the EPA nonconformance penalties.
Navistar had $3.05 billion in revenue in its fiscal-year first quarter that ended Jan. 31, compared with $2.74 billion in the same period last year when it lost $6 million.
The company lowered its guidance for the entire fiscal year to between $365 million and $295 million in profits, down from $350 million to $400 million. Ustian said the company will make up much of its first-quarter losses in the second half of its fiscal year.
Navistar said 45% of its warranty costs were for engines built from 2006 to 2008, 45% from the “early launch 2010” models and 10% from engines in Brazil. The company did not disclose the number of engines in each group.
Navistar said it decided to do much of the warranty repairs in December, resulting in such a large charge for the quarter. The company said warranty costs for the latter half of its fiscal year could be between $50 million and $60 million.
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