LISLE, Ill. — Navistar International racked up a US$2.8-billion loss in the fourth quarter of 2012, thanks in part to a spike in warranty spend and the costs associated with the company’s ongoing restructuring.
Fourth quarter results reflected $149 million in additional pre-existing warranty expenses primarily related to the company’s EPA10 big bore engines as well as $73 million in cost reduction actions. Also among the charges were $14 million in non-conformance penalties and $16 million in charges for the restructuring of Navistar’s North American manufacturing operations and engineering integration.
Revenues for the fourth quarter were $3.3 billion, down 24% compared to the fourth quarter of 2011.
“We continue to make significant progress on our turnaround and the complexity of this quarter’s results is reflective of the actions necessary during this time of transition,” said Lewis Campbell, Navistar chairman and chief executive officer. “The team has delivered numerous successes, including exceeding our cash guidance, launching the ProStar with the ISX 15-litre ahead of schedule and moving forward with several opportunities identified during our ROIC-focused business reviews. Additionally, with the improvement to our manufacturing footprint by closing our Garland, Texas, manufacturing plant and the completion of workforce reductions in North America and South America, we are positioned to exceed our goal of reducing structural costs by $175 million.”
“Unfortunately, we saw a spike in warranty spend in late October and early November for the few remaining engine issues and the cost to take the proactive actions to support our customers and fix those items is higher than we anticipated,” Campbell continued. “However, the fact is that customer feedback and positive three- and nine-months-in-service data show today we are delivering the highest quality trucks since the 2010 launch, and quality will continue to be our top priority.”
The net loss for fiscal year 2012 was $3 billion.
Meanwhile, Navistar announced it has named Dennis Mooney group vice-president, global product development. He succeeds Ramin Younessi, who is leaving Navistar to pursue other opportunities.
Mooney has been with Navistar since 2009, serving as vice-president, global product development.
“Denny’s broad product development experience and passion for quality combined with his demonstrated ability to drive program management is exactly what we need to accelerate Navistar’s strategy to bring the highest quality trucks to the market,” said Troy Clarke, president and chief operating officer.