Truck and diesel engine maker Navistar International has reached a settlement with Ford over the latter's decision to cancel a V6 diesel engine contract, Reuters reported, adding that the financial terms were not disclosed.

According to Reuters, Navistar, in an 8-K filing with the Securities and Exchange Commission, said the agreement includes "appropriate recovery of excess costs" for a plant Navistar built to make the engines. Both parties are released from their obligations under the contract.

Navistar said the settlement would not materially affect its financial outlook, Reuters added.

The news agency noted that Illinois-based Navistar had said in February that it expected to record a fiscal second-quarter loss of 25 cents to 30 cents a share, assuming it reached a "favourable" agreement with Ford.

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