Navistar Reports Lower 3Q Profit, Will Review Noncore Business Units
Navistar International Corp. said Thursday that its fiscal third-quarter profit fell from a year ago and it was reviewing its noncore businesses. It also outlined a cost-reduction plan, including job cuts.
The truck and engine maker earned $84 million, or $1.22 per share, down from $1.4 billion, or $18.24 per share, in the year-ago period, which had included a large tax benefit.
Navistar reported a pre-tax loss of $100 million, compared with a $54 million loss a year ago. Revenue for the fiscal quarter ended July 31 fell 6% to $3.3 billion.
The loss was driven by lower net sales in the U.S. and Canadian truck and engine segments, primarily due to lower military sales and reduced engine volumes in South America, the company said.
Longtime Navistar CEO Daniel Ustian retired last week, and was succeeded by Lewis Campbell, while the company promoted Troy Clarke to president.
While he was “not pleased with these results,” Campbell said in a statement he was “satisfied to learn on Day One that Troy Clarke and his team were already working on a plan to deal with . . . restoring our core North American truck, engine and parts businesses.”
Navistar said it launched a review of all of its noncore businesses, with the goal of improving its return on invested capital and driving long-term profitability. As a result, the company said it would not provide fourth-quarter earnings guidance “until industry volumes solidify and these potential actions are defined.”
Navistar did not specify its job cuts, saying it “was completing a voluntary separation program and a reduction in force of its salaried workforce” that will contribute $70 million to $80 million in annual savings, as part of its overall goal of reducing costs by $150 million to $175 million, beginning in fiscal year 2013.
Cummins Agreement on Track
A U.S. Environmental Protection Agency rule finalized late last week allows Navistar to sell noncompliant 2010 engines, and Navistar said it was “on track to finalize its agreement with [heavy-duty engine maker] Cummins Inc. by the end of October.”
Navistar will offer the Cummins ISX15 engine in some truck models and said it expects to launch that engine in its ProStar+ model beginning in December.
The engine agreement keeps on track Navistar’s use of Cummins’ selective catalytic reduction, or SCR, aftertreatment system, which will be combined with Navistar’s MaxxForce 11-liter and 13-liter engines, the company said.
