Navistar International Corp.'s (NAV) fiscal second-quarter
earnings plummeted 94% on slumping sales, with result falling short
of analysts' expectations.
As the truck maker again lowered its sales view for industrywide
retail sales of heavy-duty trucks and school buses, Navistar
slashed its fiscal-year earnings target to $2.80 to $3.10 a share
from $5.10 to $5.60.
"It is now clear that the economic recovery will take longer
than had been originally expected," said Chairman and Chief
Executive Daniel C. Ustian. "We are addressing this likelihood
straight on by maintaining focus on our core product and market
initiatives while taking the necessary steps that will allow us to
adapt to the rapidly changing marketplace.
Despite the woes, Ustian said Navistar has been cutting costs
and gaining market share, with the truck maker's military business
also helping to offset the weakness in the consumer and commercial
markets.
For the quarter ended April 30, Navistar reported earnings of
$12 million, or 16 cents a share, down from $211 million, or $2.88
a share, a year earlier. The latest results included a 44-cent
charge from January's settlement with Ford Motor Co. (F) regarding
a diesel engine pact.
Revenue fell 29% to $2.81 billion.
Analysts polled by Thomson Reuters expected per-share earnings,
excluding items, of 94 cents on revenue of $3.03 billion.
Gross margin fell to 18.3% from 19% amid the sales woes.
By segment, truck pretax profit slumped 73% while the engine
business swung to a loss, with both hurting because of the demand
declines. But the parts business, thanks to increased market share
and military business, saw its pretax profit double on a 32%
revenue jump.
The ongoing demand weakness prompted Navistar to again cut its
retail-sales forecast for Class 6-8 trucks and school buses in the
U.S. and Canada. It now projects 165,000 to 185,000 for the year
ending Oct. 31, not the reduced view of 210,000 to 225,000 seen in
March.
Shares closed Monday at $43.04 and were inactive premarket. The
stock has doubled this year, but remains down 42% from a year
earlier.
-By Kevin Kingsbury and Mike Barris, Dow Jones Newswires;
201-938-5658; mike.barris@dowjones.com