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Navistar International Corp./Aimee Keane, MEDILL

In the second quarter, Navistar posted losses greater than analysts' expectations.


Truck and engine maker Navistar narrows losses in Q2

by Aimee Keane
Jun 5, 2014


Second quarter losses for Navistar International Corp. narrowed from the same 2013 quarter, yet managed to reach levels twice as high as analysts’ estimates. For the quarter ended April 30, the Lisle, Ill.-based truck and engine manufacturer reported losses of $297 million, or $3.65 per share, compared with a loss of $374 million, or $4.65 per share in the same 2013 quarter.

According to analysts polled by Bloomberg, the loss per share estimate on a generally accepted accounting basis was $1.17.

Speaking to media and investors Thursday, president and CEO Troy Clarke said reduced structural costs cut $92 million of operating expenses in the quarter.

“We continue to take aggressive actions to optimize our cost structure,” Clarke said.

Revenue increased 8.7 percent to $2.75 billion, compared with $2.53 billion in the same quarter last year. Clarke said the increase was attributable in part to a 25 percent increase in vehicles invoiced out to customers, reflecting a 49 percent increase in the heavy duty truck segment and a 20 percent increase in medium duty trucks.

After first quarter warranty costs and lower-than-projected sales early in the year, Clarke said he’s seeing progress every day.

Economic instability in Brazil has challenged the industry as a whole, and Navistar estimates a year-over-year decline in demand of 17 percent for its engines in that region.

David Leiker, an analyst at Baird Equity Research in Milwaukee, Wisc. gives the stock a neutral rating.

“Near term,” Leiker said in a report issued Thursday, “we see elevated risk to timing the earnings recovery with reduced market share, low capacity utilization and continued actions and costs to right-size the business that could push the earnings inflection.”

 

In the six months endid April Navistar lost $545 million, or $6.70 per diluted share, on revenues of $4.95 billion, compared with a loss of $497 million, or $6.19 per share, on revenues of $5.16 billion.

The stock closed at $36.41 Thursday, up 96 cents.