Navistar Posts Profit in 1Q
This story appears in the March 16 print edition of Transport Topics.
Navistar International Corp. made money during the three months ended Jan. 31, but Volvo AB reported a loss for the fourth quarter last year, the two original equipment manufacturers said last week.
Navistar also cut its forecast for industrywide sales, but Volvo argued there is a basis for assuming that sales will increase in the future because the average age of trucks on the road is quite high by historical standards.
Navistar said March 11 that its net income totaled $234 million, or $3.27 a share, on revenue of $2.97 billion. In its fiscal first quarter last year, the Warrenville, Ill., OEM lost $65 million, or 92 cents a share, on $2.95 billion in revenue.
Volvo said in its 2008 annual report released March 10 that it earned $1.14 billion for the year but suffered a fourth-quarter loss of $154.6 million. In 2007, Volvo earned $1.7 billion for the year.
Volvo did not break out quarterly profit among its major divisions, but truck making, the largest division, did turn a profit for the year, although the bus division did not.
“Building on our successful 2008 performance, we delivered a profitable first quarter, due in part to the strength of our diversification strategy, increased market share in the heavy-truck segment and our expanding military business,” Daniel Ustian, Navistar’s chairman and chief executive officer, said in a conference call with investment analysts.
Navistar’s profits also had been “favorably impacted by the Ford resolution,” he added.
On Jan. 13, Ford and Navistar reached an out-of-court settlement in their dispute over a contract for Navistar to build diesel engines for Ford pickup trucks.
Navistar’s March 11 statement said that the Ford settlement produced $190 million in profits before taxes.
Navistar lowered its forecast for industrywide sales volumes for Class 6-8 trucks and school buses in the United States and Canada for its current fiscal year ending Oct. 31 to a range of 210,000 to 225,000 units, down from the previous forecast of 244,000 to 256,000 units.
Despite the revised forecast, Navistar reaffirmed its guidance for net income for this fiscal year, keeping it in the range of $5.10 to $5.60 a share but excluding the Ford settlement and related charges. Including results of the Ford settlement, per-share earnings should be in the range of $7.55 to $8.05, the com-pany said.
Volvo summarized last year by saying that “an anticipated start to a turnaround in the second half of the year failed to materialize as the U.S. economy remained sluggish and then grew markedly weaker with the onset of the global credit and liquidity crisis.”
Turning to the future, the company was more optimistic.
“With the existing population of trucks quite old by historical standards, there is a pent-up replacement demand in the market,” the Volvo report said.
Volvo said it sold 203,235 trucks worldwide among all its brands
in 2008, up from 187,892 in 2007. It sold 26,588 trucks in North America last year, compared with 27,255 in 2007.
Ustian said negotiations to complete a previously announced agreement with Caterpillar Inc. are going well and he expects a final accord soon. He also said Navistar plans to begin turning out trucks equipped with its engines in India later this year and by 2010 in China.
Navistar said in its statement that its market share in Class 8, including military sales, has grown by eight percentage points in the first quarter of this fiscal year, compared with the same three months last year.
“Heavy-truck market share in the first quarter totaled 24%, up 9% since 2007,” according to the statement. It added that first quarter truck shipments outside the United States and Canada and to the U.S. military “accounted for 13% and 12%, respectively, of Navistar’s worldwide truck shipments, continuing to offset the strong headwinds in the truck market in the U.S. and Canada.”
Ustian said Navistar’s 2008 truck volumes were almost identical with sales in 2007, about 20,000 units.
