Truckmaker Navistar International raised its forecast for the North American market and said it was on track to reach the high end of 2011 profit target, sending its shares up nearly 4 percent.
The improved forecast on Wednesday overshadowed a first-quarter profit that missed analysts’ expectations as truck margins disappointed.
For the first quarter ended January 31, the company reported a net loss of $6 million, or 8 cents a share, compared with net income of $19 million, or 26 cents a share, a year earlier.
Excluding the impact of engineering integration costs, Navistar earned 16 cents a share, below the analysts’ average forecast of 23 cents, according to Thomson Reuters I/B/E/S.
Sales fell 2 percent to $2.7 billion, missing Wall Street estimates of $2.9 billion.
Profit margins in Warrenville-based Navistar’s truck and parts divisions were lower than expected, offsetting a surprisingly strong contribution from its financial services arm, JPMorgan analyst Ann Duignan said.
Trucks account for the bulk of Navistar’s business, with engines, parts and financial services making smaller contributions.
Shares of the maker of International brand trucks, MaxxForce brand diesel engines, IC Bus brand buses and Monaco brand motorhomes were up 3.8 percent to $63.17 in morning trading on the New York Stock Exchange after jumping as high as $66.48 earlier.
The company has said the first half of the year will be weaker than the second half. It said on Wednesday it was seeing the beginning of a solid recovery in its traditional North American markets.
Demand for trucks has been depressed for about four years as a weak economy and housing market meant fewer goods needed to be shipped, and fleet owners delayed upgrades. Industry orders for heavy-duty trucks bottomed out in early 2010 and have been rebounding in recent months.
HIGHER FORECAST
Navistar, which gets the bulk of its sales from North America, has about a 22 percent share of the heavy-duty truck market and has said it aims for about 25 percent.
A key question for Navistar is whether its engine design, which differs from that of its peers in terms of size and emissions technology, will grow or erode its market share, analysts say.
The company said it raised truck production schedules by 40 percent on various models, reflecting increasing orders. It said that so far it has been able to handle rising commodity costs.
Navistar said it would probably reach the high end of its full-year earnings outlook, which it raised at an analyst meeting in January. The forecast calls for a profit of $5 to $6 a share.
