Navistar Swings to a Loss During Third Quarter
Navistar International Corp. swung to a fiscal third-quarter loss as the commercial truck manufacturer logged lower volumes in its core North America truck business, and it also unveiled a cost-cutting program to save $50 million to $60 million annually starting next fiscal year.
MarketWatch reported that for the quarter, ended July 31, Navistar reported a loss of $247 million, or $3.06 a share, versus a year-ago profit of $84 million, or $1.22 a share. The year-ago quarter included an income tax benefit of $188 million. Excluding one-time items, Navistar reported a loss from continuing operations of $2.94 a share versus a year-ago profit of $1.16. Revenue fell 12% to $2.9 billion.
The company attributed the decline in volume to the impact of its transition to its new emissions treatment system and weaker industry conditions.
Navistar has been mired in a stretch of quarterly losses as the company encounters rising costs for warranty claims on its new 13-liter engines and escalating expenses for adopting a different exhaust treatment system for its engines. The company recently exited the RV marketplace, selling its interests to Allied Specialty Vehicles.
Navistar was unable to meet the latest federal standard for reducing smog-causing nitrogen oxide in diesel exhaust with an alternative treatment process advocated by former Chairman and Chief Executive Dan Ustian. The company ended up adopting the same treatment system used by the rest of the U.S. truck industry. The U.S. Environmental Protection Agency (EPA) certified Navistar’s 13-liter engine this spring, but truckers have been reluctant to buy Navistar trucks.
CEO Troy Clarke said he is “encouraged by the growing customer acceptance” of Navistar’s new products. However, he also said the company needs to step up its game financially.
“We are already implementing additional cost reduction and business improvement actions to counter our near-term volume challenges,” he said. “This includes resizing our company to match our current business environment.”
The new program is expected to impact about 500 salaried employees and long-term contractor positions globally. Navistar has about 18,500 employees, according to FactSet.