Dow Jones Newswires | Navistar International Corp.’s fiscal
first-quarter profit slumped 93 percent on a big year-earlier
litigation gain, as revenue and margins also declined.
Shares fell 4.8 percent to $42.14 in after-hours trading as the
commercial truck and engine maker’s results fell below Wall Street’s
expectations.
“First-quarter results reflect the progress we are making in the
toughest of economic conditions and in a normally difficult seasonal
quarter for our company due to fewer operating days,” said Chairman and
Chief Executive Daniel Ustian.
Navistar and other truck makers have been mired in a sales slump since 2007, caused by a combination of low freight volumes and reduced access to credit keeping trucking companies from replacing their fleets. But the company saw sales improve at the end of 2009 as customers bought more trucks to avoid higher prices this year to cover the cost of complying with stricter pollution standards on diesel exhaust.
For the quarter ended Jan. 31, Navistar reported a profit of $17 million, or 23 cents a share, down from $234 million, or $3.27 a share, a year earlier. The latest results included a $17 million benefit related to Ford Motor Co., while year-earlier results included a $190 million settlement with Ford related to the termination of Navistar’s engine supply contract.
Revenue dropped 5.4 percent to $2.81 billion.
Analysts estimated earnings of 85 cents on revenue of $3.18 billion, according to a poll by Thomson Reuters.
Gross margin fell to 19.5 percent from 21.8 percent.
Profit in the truck and parts segments declined 69 percent and 24 percent, respectively. The engine segment, meanwhile, swung to the black amid higher-than-expected demand in Brazil.
Navistar also affirmed its sales volume target for North American industrywide retail sales of trucks and buses, as well as its earnings target for the year.
Earlier Tuesday, Navistar said it will form a partnership with the financing unit of General Electric Co. that is expected to improve Navistar’s ability to provide large loans for its customers’ purchases.
