Navistar is Ahead of Schedule on New Engines
Navistar International Corp. is preparing to deliver a revamped line of truck engines ahead of its April schedule and to outline a new set of financial targets, said interim Chief Executive Lewis Campbell.
According to the Wall Street Journal, Campbell said 13-liter and 11-liter engines that comply with federal emissions regulations could reach the market in March rather than April. In the meantime, deliveries of Navistar trucks with Cummins Inc.-built 15-liter engines will begin by the end of the year. All these engines will help the company regain lost market share, said Campbell, who predicted the Navistar-built engines will offer better fuel economy than rivals’ engines.
Campbell said Navistar internally has identified business units or projects he would close or sell to raise margins following the failed engine-emissions strategy pursued by former CEO Dan Ustian. He declined to name those units. In a separate report by the Chicago Tribune, analysts have cited the company’s Navistar RV unit, formerly Monaco RV LLC, as well as some of Navistar’s foreign operations, as among businesses that could be sold.
The costs of the failed emissions strategy caused Navistar’s profit and stock price to plummet and attracted calls for change from activist investors, including billionaire Carl Icahn.
“We’re doing a lot of things right,” he said in an interview Thursday at the company’s new headquarters outside Chicago. “If we haven’t made dramatic progress in the next 12 months, I’d be shocked.”
Navistar posted a $241 million loss for the nine months ended July 31, compared with a profit of $1.47 billion in the same period a year ago as costs associated with the engine strategy rose and revenue from truck and engine sales stalled.
Key to revitalizing Navistar is improving the company’s North American truck operations, Campbell said. The company will be dialing down overseas growth initiatives where returns are lagging. Under Ustian, Navistar initiated an overseas expansion strategy in a bid to expand the company’s sales.
“It didn’t make sense to me to be too aggressive globally when we haven’t fixed North America,” Mr. Campbell said.
The businesses or projects he plans to close or sell would cut a combined $260 million in annual revenue, including $50 million from the closed 15-liter engine project, but generate $52 million in savings, according to a company presentation.