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Navistar revamps senior management in wake of poor 2Q

LISLE, Ill. -- Navistar International has announced senior management changes in response to a disastrous first quarter in which it lost $172 million.


LISLE, Ill. — Navistar International has announced senior management changes in response to a disastrous first quarter in which it lost $172 million.

“Certainly, our first half performance was unacceptable. It included a warranty reserve to repair early 2010 and 2011 vehicles,” said Daniel C. Ustian, Navistar chairman, president and chief executive officer. “We were also affected by speculation surrounding our engine certification for our Class 8 engine, which is why we are working tirelessly with the US EPA to get resolution.”

The Q2 results were affected by EPA non-conformance penalties, warranty-related costs and the payment of $181 million in income tax valuation allowance related to Canadian deferred tax assets, the company announced. The company’s six-month period ending Apr. 30 saw it lose $325 million.

Navistar projects a better second half, and anticipates a net income between break-even and $140 million by the time the 2012 fiscal year concludes.

“Going forward, we’ve identified a path for delivering strong profits in the second half of 2012,” Ustian said. “Historically, the second half is stronger across our businesses, and we expect to build on this with improved market share in North America, stronger global performance and further cost reductions across all operations. Additionally, we’re making management and operational structure changes to align our organization in a more effective manner to drive these results.”

Troy Clarke, currently president of Navistar Asia Pacific, is taking on responsibility for all Navistar’s operations in the newly-created role of president, truck and engine, the company announced.

Jack Allen has been promoted to the position of president, North America truck and parts. Engine group president Eric Tech, meanwhile, will have his duties expanded to include the position president, global truck and engine. The changes will take effect July 1, pending board approval, Navistar announced.

“I am confident that our new management structure will lead to greater planning and execution around our integration strategy, further enabling us to deliver enterprise-wide profitability, leverage assets more effectively, streamline decision making and bring renewed energy to our team,” Ustian said.


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