UPDATE: Navistar 2Q Profit Down 94% On Sales Slump
09 Junio 2009 - 10:37AM
Noticias Dow Jones
Navistar International Corp. (NAV) said the freight industry is
taking longer than expected to rebound, as the commercial truck
maker slashed its sales outlook for the year and reported 94%
reduction in fiscal second-quarter profit.
The company predicted Tuesday that industrywide sales of
heavy-duty trucks and buses in the U.S. and Canada would fall to a
range 165,000 to 185,000 for the company's fiscal year ending Oct.
31. The forecast is the lowest volume of retail sales since 1962.
In March, Navistar estimated 2009 sales would total 210,000 to
225,000 trucks.
A downturn in the global economy has driven down shipping
volumes and kept trucking companies from needing to buy new trucks.
Navistar competitor Paccar Inc. (PCAR), whose truck brands include
Peterbilt and Kenworth, also reported sharply lower quarterly
revenue and income in April and rolled back its projections for
truck sales.
Navistar Chairman and Chief Executive Daniel Ustian said the
continued weakness in the freight industry is holding back truck
demand, which has been in a slump since 2007.
"This is clearly one of the toughest markets we've experienced,"
Ustian said during a conference call with Wall Street analysts.
"The industry felt 2009 would be a good year, [but] freight
continues to be challenged."
The Illinois-based truck and engine builder slashed its profit
guidance for the year to $5.20 a share to $5.50 a share, from $7.55
to $8.05 a share in March. The outlook includes a one-time gain
from the company's settlement in January of a dispute with Ford
Motor Co. (F) over Navistar's contract to build diesel engines for
Ford pickup trucks.
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 charge of 44
cents a share from the Ford settlement and $45 million in
unexpected engine-warranty charges. Revenue in the quarter 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 plunging sales. Pretax
profit from truck-making activities slumped 73% from a year ago.
The engine business, meanwhile, swung to a loss.
Ustian said Navistar has been cutting costs and gaining market
share. The company's military truck sales, joint ventures with
other vehicle makers and other sideline businesses are helping to
offset the weakness in the commercial truck market.
On June 4, Navistar completed the purchase of recreational
vehicle maker Monaco Coach Corp. for $47 million. The Oregon-based
company, which had filed for bankruptcy earlier this year, is
expected to contribute $600 million to $1 billion in revenue to
Navistar by the end of 2011.
Navistar also noted that the U.S. Pentagon recently increased
the anticipated order size for new armored utility trucks for U.S.
troops in Afghanistan to as many as 10,000 vehicles from 2,800.
Navistar is one of several truck builders competing for a
production contract for the vehicle.
"This is significant amount of business for someone, and we know
we're in the mix," Ustian said. Navistar expects sales of military
trucks to generate at least $2.7 billion in revenue this year.
Navistar's robust sales of trucks to the military in recent
years also is helping to drive revenue higher from replacement
parts. Revenue from parts sales rose 32% in the quarter.
Navistar stock recently was up 2.14% at $43.96 a share.
-By Bob Tita, Dow Jones Newswires; 312-750-4129;
robert.tita@dowjones.com
(Kevin Kingsbury and Mike Barris contributed to this
report.)