Navistar Earns $86 Million in Fourth Quarter

By Frederick Kiel, Staff Reporter

This story appears in the Jan. 4 print edition of Transport Topics.

Truck and engine maker Navistar International Corp. reported a fiscal fourth-quarter profit of $86 million, or $1.19 a share, driven by what it said was a pickup in commercial truck volume and continued military sales.

In the 2008 fourth quarter, Navistar lost $343 million, or $4.81 a share, with the company attributing much of the loss to the termination of its agreement to build diesel engines for Ford trucks.

“During one of the weakest economies we can recall, we are pleased with our performance and our ability to continue to invest in the long-term future of the business,” Andrew Cederoth, Navistar’s chief financial officer, said in a statement. “As a result, we believe we are well-positioned to capitalize on a variety of opportunities that lie ahead.”

For the fiscal year ended Oct. 31, net income was $320 million, or $4.46 a share, on revenue of $11.6 billion. In fiscal 2008, Navistar earned $134 million, or $1.82 a share, on revenue of $14.7 billion.

Earnings for the year benefited from a settlement with Ford Motor Co. in which Navistar received a pretax sum of $160 million, equal to $2.19 per share, Navistar said.

Navistar, which builds International Trucks and MaxxForce engines, said the company reached those profits “in the face of the worst truck market in 47 years.”

The company produced 180,000 total vehicles globally during the fiscal year, far fewer than the 415,000 units it wants to produce yearly, Daniel Ustian, chairman and CEO, told investment analysts in a conference call on Dec. 22.

“Certainly, 2009 was . . . as low as we have ever experienced,” Ustian said.

Navistar’s truck segment earned $147 million for fiscal 2009, down from $805 million in 2008. However, the company said it increased its market share across most vehicle classes.

Through November, Navistar sold 23,958 new Class 8 vehicles in the United States, giving it 28.8% of the market for top spot in the segment, according to WardsAuto.com.

Navistar’s engine segment produced $253 million in profits

for fiscal 2009, compared with a 2008 loss of $366 million, which in-cluded $395 million of asset impairment and other related charges to its diesel engine business for Ford pickups.

Total engine volumes declined by 76,200 units in fiscal 2009. Navistar did not disclose the number of engines it sold.

Navistar executives said the development of the company’s 15-liter program is progressing as planned, with the first demo units now being delivered to key customers for field testing.

Ustian declined to give a date when the MaxxForce 15-liter engine will be available but said Navistar was educating potential buyers that its 13-liter engine could handle most of the work of a 15-liter, with in-creased fuel efficiency.

Meanwhile, charges during the fourth quarter included a $31 million asset impairment charge related to the idling of the Chatham, Ontario, and Conway, Ark., manufacturing plants, and an $11 million charge related to company’s refinancing of its capital structure.

“The steps taken in 2009 have positioned us to move forward with our operations when the economy continues to recover in 2010,” Cederoth said.

Navistar said it was well-prepared to meet new federal emission standards that took effect Jan. 1 through its “advanced” exhaust gas recirculation MaxxForce engines.

The company said it delivered 28 IC Bus school buses meeting the 2010 emission requirements to the Columbus, Miss., school district in early December, “marking the first 2010-compliant diesel buses to be delivered to its customers.”

Navistar has tested its 2010 engines on the road more than 15.7 million miles.