Navistar reports net loss for 4Q and year

As previously forecast, Navistar International Corporation reported a net loss for both the fourth quarter and year ended October 31, 2002. Restructuring, non-recurring charges and loss from discontinued operations, net of taxes, totaled $404 million for the year, compared to a prior forecast of a maximum $456 million. The net loss from continuing operations for the fourth quarter, excluding the after-tax restructuring and non-recurring charges and loss from discontinued operations, amounted to $60 million, or ($0.98) per diluted common share. The consensus estimate of financial analysts had been for a loss from continuing operations of ($1.07) per diluted common share. Including the charges and discontinued operations, the fourth-quarter loss amounted to $460 million, or ($7.58) per diluted common share. In the fourth quarter a year ago, the company reported earnings of $7 million, or $0.11 per diluted common share. Consolidated revenues for the fourth quarter of 2002 were up 12 percent to $2.1 billion from $1.8 billion in 2001.Consolidated sales and revenues for the year ended October 31, 2002, totaled $6.8 billion, compared with $6.7 billion a year earlier. The net loss from continuing operations, excluding restructuring and non-recurring charges and discontinued operations, amounted to $132 million in 2002, equal to ($2.18) per diluted common share, compared with a net loss of $9 million, or ($0.15) per diluted common share in 2001. Including the charges and discontinued operations, the net loss for 2002 totaled $536 million, equal to ($8.88) per diluted common share, compared with a net loss of $23 million or ($0.39) per diluted common share in 2001.The decline in income from continuing operations, excluding restructuring and non-recurring charges and discontinued operations ($123 million), is the result of significant increases in the cost of post-retirement benefits and interest expense combined with the impact of several unusual items that have not been classified as restructuring or other non-recurring charges. These unusual items total (approximately $115 million pre tax) and include the impact of the United Auto Workers (UAW) negotiations, the Canadian Auto Workers strike, brake recalls, Class 8 engine shortages and the impact of exchange losses in Brazil and Argentina. These unfavorable impacts were partially offset by material cost improvement and manufacturing performance. “As we move forward into 2003 we will drive further cost improvements as we gain experience with our new products,” said John R. Horne, Navistar chairman and chief executive officer. He noted that 2002 was one of the most difficult periods in the company’s 100-year history yet the company took a number of giant steps forward that will enhance future earnings opportunities. Major initiatives included:-- Realigned the company’s truck manufacturing facilities.-- Introduced a new lineup of High Performance Trucks (Class 6-8).-- Launched a new 6-liter V8 engine.-- Negotiated a new United Auto Workers (UAW) union contract that allows for a more flexible workforce at a more competitive wage and benefit structure.-- Continued progress on the Blue Diamond truck and parts joint venture with Ford Motor Company.“Steps were taken during 2002 to discontinue a number of processes and to close a number of facilities that were utilized for our old products,” Horne said. “We reduced our fixed costs and maintained a healthy distribution system throughout the downturn. Our goal for 2003 is to be profitable. We have positioned the business well, and now is the time to reap the benefits.”Horne said that given the weakness in the Class 8 market, the company expects a loss in the first quarter of 2003 to be in the area of ($1.45) to ($1.55) per diluted common share. The company expects demand for Class 8 trucks to remain weak during the first half of the year due to the pull forward of demand in the second half of 2002 as a result of the change in emission regulations. Demand for Class 8 trucks is expected to improve in the second half of the year because of improving trends in used truck inventories, the industry tonnage hauled and already extended replacement cycles.Horne emphasized that the company still forecasts a small profit for 2003, although there are some significant costs, such as the change in earnings assumption on pension assets that were not included in the original forecast, which must be avoided or offset for this forecast to materialize.

Hide comments

Comments

  • Allowed HTML tags: <em> <strong> <blockquote> <br> <p>

Plain text

  • No HTML tags allowed.
  • Web page addresses and e-mail addresses turn into links automatically.
  • Lines and paragraphs break automatically.
Publish