WARRENVILLE, Ill. — Navistar has reported that it returned to profitability in its third fiscal quarter ended July 31, 2003.
Officials said that the company is also on track to be solidly profitable in the fourth quarter.
Net income from continuing operations for the three months ending July 31, 2003 totaled $19 million, equal to $0.26 per diluted common share, compared with a loss of $16 million or ($0.26) per diluted common share a year ago.
The consensus estimate of analysts was a profit of $0.25 cents per share.
Consolidated sales and revenues from manufacturing and financial services operations for the third quarter totaled $1.9 billion, compared with $1.6 billion in the same quarter a year ago.
Daniel C. Ustian, Navistar president and chief executive officer, said the third quarter profit was achieved despite continued softness in medium truck shipments, but said he was encouraged by strong pickup in new medium truck orders in July.
According to Ustian, preliminary July industry Class 6-7 medium truck orders totaled 7,700 units, up 37 percent over a year ago and the highest monthly total since August 2002. The company, the leader in the Class 6-7 market with year-to-date market share of 42 percent, recorded 3,400 orders in July, or 44 percent of the industry total.
Industry heavy truck orders in July totaled 17,200 units, the third consecutive month of solid order rates. Ustian noted heavy truck orders are generally considered an early-cycle barometer of overall economic momentum.
“Our focus continues to be on improving our cost structure so that we can be profitable at all points of the business cycle,” Ustian said. “We are pleased by the outstanding performances recorded in the third quarter by both our parts and service organization and our finance group. We anticipate we will be solidly profitable in the fourth quarter, with diluted earnings of between $0.65 and $0.75 per share from continuing operations. 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.”
Turning to the future, Ustian said the company looks for “solid profitability in 2004 as overall economic momentum improves.”
Manufacturing gross margins in the third quarter rose to 13.5 percent, up from 12.9 percent in the second quarter and above the 12.2 percent reported in the third quarter last year.
For the first nine months of fiscal 2003, Navistar reported a loss from continuing operations of $91 million, or ($1.35) per diluted common share, compared with a loss of $71 million, or ($1.18) per diluted common share in the first nine months of 2002. Consolidated sales and revenues for the first nine months of fiscal 2003 rose to $5.3 billion from $4.7 billion in the same period in 2002.
Worldwide shipments of International brand heavy and medium trucks and school buses during the third quarter totaled 21,200 units, up from the 19,800 units shipped in the third quarter of 2002. Shipments of mid-range diesel engines to other original equipment manufacturers during the quarter totaled 82,200, compared with 73,400 units in the third quarter last year.
Despite the July industry increase in orders for medium trucks, Ustian said the company has lowered its forecast for North American industry retail sales for Class 6-7 trucks to 72,700 units for the year ending October 31, 2003, down from the previous forecast of 77,300 units and approximately the same as 2002 sales. School bus retail sales forecasts remain unchanged at 27,500 units, as does the forecast for Class 8 heavy trucks at 156,000 units. He explained the July increase in industry orders came too late to improve production and retail sales for the company’s fiscal year ending October 31, 2003.
The company also reduced the estimate of mid-range diesel engines that International will produce for its own use and for sale to other manufacturers from 417,000 units to 400,000 units for the year ending October 31, 2003 as the result of the decline in anticipated industry demand for medium trucks and the slight decline for super duty pickup trucks.
Navistar International Corporation (NYSE: NAV) is the parent company of International Truck and Engine Corporation. The company produces International* brand commercial trucks, mid-range diesel engines and IC brand school buses and is a private label designer and manufacturer of diesel engines for the pickup truck, van and SUV markets. The company also provides financing for customers and dealers.
Additionally, through a joint venture with Ford Motor Company, the company builds medium commercial trucks and sells truck and diesel engine service parts. Additional information is available at www.nav-international.com
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