Navistar shakes off six-quarter losing streak

Aug. 15, 2003
Navistar International Corp snapped a six-quarter losing streak with an $18 million profit in its third fiscal quarter, citing strong results from its
Navistar International Corp snapped a six-quarter losing streak with an $18 million profit in its third fiscal quarter, citing strong results from its parts and service and financial units.

But the maker of trucks, buses, and diesel engines said even the better results it expects in the fourth quarter won’t prevent it from finishing the fiscal year with a loss for the third straight year.

Net earnings for the quarter ended July 31 amounted to 25 cents a share, compared with a loss a year earlier of $16 million, or 27 cents a share.

Income from continuing operations was 26 cents a share, or a penny higher than the consensus estimate of Wall Street analysts surveyed by Thomson First Call.

Revenues jumped 19% to $1.89 billion from $1.59 billion.

Navistar has been struggling for more than two years, losing $23 million in fiscal 2001 and $536 million a year ago amid economic weakness that has held back orders for new trucks from freight haulers.

Daniel Ustian, president and chief executive officer, said shipments of medium-size trucks continued to be soft in the third quarter, but he was encouraged by a strong pickup in orders in July. Preliminary July orders were up 37% over a year ago and the highest monthly total since August 2002.

He predicted earnings of 65 to 75 cents a share from continuing operations in the fourth quarter, which is below analysts’ consensus estimate of $1.00. Navistar lowered its forecast for industrywide Class 6–7 (medium) truck sales in North America in the fourth quarter to 72,700 units, down from 77,300.

“Despite a strong and profitable second half, based upon our current industry expectations, it will be difficult to overcome the deficit recorded in the first six months of the year,” Ustian said.

The company anticipates “solid profitability” in 2004 as overall economic momentum improves, he said.

For the first nine months of its fiscal year, Navistar lost $95 million, or $1.41 a share, compared with a loss of $76 million, or $1.27 a share, for the same period of 2002. Revenue rose to $5.34 billion from $4.73 billion.

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from staff and wire reports

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