September 4, 2013
Navistar International Corporation Wednesday announced a third quarter 2013 net loss of $247 million, down significantly from the third quarter 2012 net income of $84 million.
Troy A. Clarke, Navistar’s president and chief executive officer, says the year-over-year decline was primarily driven by lower volumes in North America truck business prodded by the impact of the company’s transition to SCR-based products and weaker industry conditions.
“We’re encouraged by the growing customer acceptance of our new products,” Clarke says. “We also continued to make solid progress on key elements of our Drive to Deliver turnaround plan, especially the on-time launches of our new Class 8 product offerings, which drove Navistar’s order share up to more than 20 percent in the quarter, compared to 12 percent in the second quarter.”
Navistar Chief Operating Officer Jack Allen says the company’s goal is to get its marketshare back to historical levels of 20-plus percent, and the company’s third quarter performance show they are trending in the right direction.
“Truck orders are a blend of dealer and customer orders for near-term fulfillment,” he adds. “There’s little dealer stock on the Class 8 side. It’s sold-order driven. We’re certainly not declaring victory but we’re encouraged by the repeat business.”
Navistar set a goal to settle its marketshare at 18 percent for the end of the 2013 fiscal year.
Allen and Clarke both said the company’s 13 liter engine has been met with rave reviews and led to higher engine orders with some repeat customers.
“We’re very pleased with our 13 liter engine and it will be part of our portfolio for a long time,” Clarke says.
“On our order board right now, 34 percent of the trucks on order are 13 liter SCR,” with the balance being Cummins ISX and a smattering of EGR engines, Allen says.
With the positive momentum behind market share and take rates, the fact remains that Navistar lost more than $200 million last quarter, and in its ongoing effort to get the company back in the black Navistar began implementing new cost-reduction initiatives, including a company-wide reduction in force.
The company said Wednesday it will cut a combined 500 salaried employees and long-term contractor positions globally, and expects to complete nearly all of these job reductions by the end of November.
Navistar projects these and related activities will generate an additional $50 to $60 million in annual savings starting in its fiscal year 2014.
For the third quarter 2013, Navistar’s truck segment reported a loss of $58 million, compared with a $26 million loss for the same period a year ago. The segment also saw lower net sales of $1.92 billion – a 15 percent decrease year-over-year.
The engine segment reported a loss of $86 million, compared to a $47 million loss in third quarter 2012. Net sales were 14 percent lower year-over-year at $723 million.
Total revenue in the quarter was $2.9 billion, down 12 percent from the third quarter of 2012, reflecting lower net sales across all classes of Navistar’s core truck business, due to the impact of the company’s SCR emissions transition for both heavy- and medium-duty vehicles and a nine percent drop in overall industry demand in North America during the quarter.
In an effort to boost its medium-duty business, Navistar announced Tuesday plans to offer the Cummins ISB engine in its International DuraStar medium-duty trucks and IC Bus CE Series school buses effective immediately.