Navistar Inc. Reports Wider Net Loss During 2Q
Navistar International Corp. on Monday said its losses widened in the second quarter as it absorbed higher-than-expected warranty costs and lost sales as it transitioned to a new engine technology.
“We are in the midst of a very extensive turn-around,’’ Jack Allen, Navistar’s chief operating officer, said in an interview. “We are making great progress in many aspects of our turn around, but we also know that we have a lot of hard work to do and that work centers around quality and sales.”
The company divested its RV interests in May with the sale of Navistar RV to Allied Specialty Group Inc.
During a conference call Monday (June 10), Troy Clarke, Navistar president and CEO, said, “We thought that progress would have come faster. It didn’t.’’
Navistar was expected to narrow its losses to put it on track to return to profitability by the end of the year. Asked if that plan was still on the table, Clarke said the company is taking things “one quarter at a time.”
Clarke said pre-existing warranty costs of $164 million overwhelmed the second quarter, but he doesn’t expect a repeat this quarter. The costs are related to engines that Navistar built using technology that failed to meet 2010 federal emission standards.
Last year, Navistar changed course and began outfitting its trucks with 15-liter engines from competitor Cummins Inc. In April, it started selling trucks with its own 13-liter engines that combine its technology with that of Cummins to reduce levels of smog-causing nitrogen oxide.
Clarke said he also expects fewer one-time charges in the second half of the year related to cost-cutting moves such as layoffs, plant closures and sales of businesses. The company said it is on track to exceed its cost-cutting goal of $175 million this year.