Truck and diesel engine producer Navistar International Corporation on Tuesday reported a fourth quarter profit, reversing the result for the same period a year ago.

It marked the company's second consecutive quarter of profitable operations, but the second half profitability wasn't enough to put the company in the black for its full fiscal year ended October 31, 2003.

Earnings from continuing operations for the fourth quarter reached $US77 million, equal to $1.00 per share. Included in the fourth quarter earnings was an after tax benefit of $22 million resulting from adjustments to previously recorded restructuring charges. Revenues for the fourth quarter of fiscal 2003 amounted to $2.0 billion, approximately the same as revenues in the fourth quarter of fiscal 2002.

Navistar president and chief executive officer Daniel Ustian said that fourth quarter results reflect improvement in the company's cost structure and, as previously forecast, profit expectations were achieved without the benefit of the credit relating to the company's restructuring initiatives.

A year ago, Navistar reported a fourth quarter loss from continuing operations of $405 million, or $6.67 per share, which included after tax restructuring and non-recurring charges of $345 million.

The fourth quarter benefit of $22 million resulted from the net adjustment to the previously recorded restructuring charges, primarily related to the decision to keep the Chatham, Ontario heavy truck assembly plant open.

Last year, Navistar had announced plans to close the plant and move production to its plant in Escobedo, Mexico. In September 2003, the company announced it would keep the plant open after negotiating a new labor contract with the Canadian Auto Workers union and obtaining assistance from the Canadian government. Because of its decision to keep Chatham operating, the company reversed a portion of the fourth quarter 2002 charge related to employees who will no longer be terminated.

The full impact of the Chatham reversal was partially offset by a fourth quarter charge for early retirement programmes with the United Auto Workers (UAW) and the CAW as part of the labour agreements negotiated with those unions.

A total of 1,600 employees currently plan to retire under the early retirement programmes, allowing the company to recall laid-off workers and thus reducing the pool of laid-off workers receiving benefits.

Consolidated sales and revenues for the year ended October 31, 2003, reached $7.3 billion, up from $6.8 billion a year earlier. The net loss for 2003 amounted to $18 million, equal to $0.27 per share, a more than half billion-dollar improvement over the net loss of $536 million reported in 2002.

Ustian said the truck industry recovery is slower than originally predicted.

Navistar is forecasting United States and Canadian total truck industry retail sales volume for Class 6-8 and school buses in fiscal 2004 at 304,500 units, up 16% from the 263,400 units sold in fiscal 2003. Demand for heavy trucks is expected to increase 20% to 191,000 units, while demand for Class 6-7 medium trucks is estimated at 86,000, up 15% from the 74,900 units sold in 2003.

School bus demand is forecast at 27,500 units, down 6% from 29,200 units in 2003. Sales of mid-range diesel engines to other original equipment manufacturers should increase 5% to 349,000 units.

Ustian said that the company's forecast for 2004 retail commercial truck sales volume is lower than that forecast by some other sources, but noted that the company is historically conservative in its outlook.

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