Navistar International Corporation has said that it expects to deliver a full year profit despite the challenging outlook, having reported growth in net income for its first fiscal half that was largely boosted by a settlement with Ford.
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The truck and engine group said that for the first six months of fiscal 2009, it saw net income of US$246m, including the positive effect from the settlement with Ford of $155m. This compared to net income of $146m, in the first six months a year ago.
First half net sales and revenues amounted to $5.8bn, compared with $6.9bn a year ago.
The company said that second quarter results were impacted by weak industry sales in every part of Navistar’s commercial business, as compared to a year ago.
The company reported second quarter profits of $12m on $2.8bn in net sales and revenues. Second quarter earnings were reduced by $31m by other costs related to the Ford settlement. In the second quarter a year ago, Navistar reported net income of $211m on $3.9 billion in net sales and revenues.
In addition in the latest period, the company incurred research and development costs, and unanticipated costs related to warranty on products sold in prior periods, partially offset by the benefits from certain out-of-period accounting adjustments.
“Although the current growth of our traditional businesses is hamstrung by the global recession, we have nonetheless been able to advance numerous strategic and tactical initiatives that will be key contributors to our future success,” said Navistar chairman, president and chief executive officer Daniel Ustian.
“Continued reductions in our product costs, lower selling, general and administrative expenses and increased market share growth, along with the company’s military business, will enable us to maintain pace toward a profitable fiscal 2009 despite three consecutive years of dwindling truck volumes,” said Ustian.
The company now projects that total truck industry retail sales volume for Class 6-8 trucks and school buses in the US and Canada for the fiscal year ending 31 October 2009, will total between 165,000 and 185,000 units, down from the previous forecast of 210,000 to 225,000 units.
Based on second quarter results and company forecasts for the remainder of the year, Navistar reported guidance for net income for its fiscal year in the range of $200m, or $2.80 per diluted share, to $225m, or $3.10 per diluted share, excluding the Ford settlement and related charges. Including results of the Ford settlement, per diluted share earnings should be in the range of $5.20 to $5.50 per diluted share.
“It is now clear that the economic recovery will take longer than had been originally expected. We are addressing this likelihood straight on by maintaining focus on our core product and market initiatives while taking the necessary steps that will allow us to adapt to the rapidly changing marketplace,” said Ustian.
