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Navistar beats Q1 expectations amid slumping sales

Jason Cannon March 13, 2013

Revenues from Navistar’s truck segment declined nearly 21 percent to $1.7 billion in the first quarter of 2013, posting a loss of $58 million compared to a loss of $27 million in the first quarter of fiscal 2012, according to filings released earlier this month.

The greater loss, the company says, was tied to the decline in traditional truck volumes and increase in depreciation owing to the closure of its Garland, Texas, facility.

Manufacturing revenue decreased by $372 million or 12 percent for the quarter versus first quarter of 2012.

“The majority of this decrease was in our traditional Truck business,” says Andrew J. Cederoth, Navistar CFO and Executive Vice President, “where vehicle shipments were down 24 percent, or 4,200 units from the first quarter of 2012.”

Revenues from its engine segment fell nearly 14 percent to $740 million in the quarter, racking up a loss of $27 million – far better than a loss of $120 million in the same quarter last year.

Cederoth cited lower warranty costs of $83 million for prior-period adjustments as a driving factor in the engine segment boost.

The company says improvement was driven by lower charges for pre-existing warranties and a decline in engineering and product development expenditures in South America and lower SG&A expenses.

The bright spot at Navistar was its parts segment, which soared 17.7 percent to $552.0 million. Profits from the segment jumped 72 percent to $86 million, up from $50 million in the first quarter of 2012.

The year-over-year rise in profits was driven by favorable volume and pricing strategies as well as lower SG&A expenses, the company says.

Overall, the company recorded a loss of $114 million in the first quarter of fiscal 2013, compared with $144 million during the same period the year before.

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