Even though the industry is at a nearly 50-year low, net income attributable to Navistar International Corporation for the second quarter ended April 30 was $30 million, equal to $0.42 of diluted earnings per share. Net income for the second quarter a year ago was $12 million, including the impact of costs related to the Ford settlement.
Revenues for the second quarter totaled $2.7 billion.
“Our expectations are to be profitable across the business cycle,” said Daniel C. Ustian, Navistar chairman, president and CEO. “The plans we have put in place for our core businesses are on track through the second quarter. We are confident that the foundation is in place to continue to support our profitability and grow our business.
“We remain confident for the remainder of the year about our ability to deliver fiscal 2010 results in the previously reported range. The orders we have received for our 2010-compliant products ensure that the business is well positioned for the rest of the year.”
The company said it is prepared for a successful launch of its MaxxForce Advanced EGR (exhaust gas recirculation) engines as it continues on its path to meet the latest emissions requirements. During the quarter, key regulatory certifications were obtained for 2010 MaxxForce 13 and MaxxForce DT Advanced EGR big bore diesel and mid-range diesel engines.
Other significant milestones achieved in the quarter included improvements in Navistar’s cost structure, which were achieved through reductions in material costs and rationalization of its North American plants to create cost efficiencies in its Class 8 heavy truck and school bus production lines. The company also completed a retail funding alliance with GE Capital Corporation and GE Capital Commercial, Inc. in which GE will become the preferred source of retail customer financing for equipment offered by the company and its dealers in the United States to help it grow sales of trucks and school buses.
During the quarter, the company also began shipping a limited number of International MaxxPro Dash Mine Resistant Ambush Protected (MRAP) vehicles that include the DXM independent suspension solution, which were part of an order Navistar received in January from the U.S. military.
Segment results:
Truck — For the second quarter ended April 30, the truck segment realized a profit of $76 million, compared with a year-ago second quarter profit of $56 million, which included substantial U.S. military sales as part of its MRAP vehicle program. The increase was driven primarily by improved commercial performance and continued material and manufacturing cost improvements offset partially by lower military sales. Commercial chargeouts in its traditional North American Class 6-8 truck and school bus business increased by 29 percent for the second quarter and 15 percent for the six-month period. Also contributing to the increase was the value added tax recovery of $30 million in Brazil.
Engine — The engine segment had a $15 million profit in the 2010 second quarter, which reflects increased demand in Brazil and the value added tax recovery of $12 million in Brazil, partially offset by decreased volumes in North America due to the expiration of the company’s contract with Ford to supply diesel engines in the United States and Canada. This is compared with a year-ago second quarter loss of $84 million, which was impacted by the Ford settlement and other related charges as the company began to transition out of its business with Ford. Other factors contributing to second-quarter profit included a 54 percent increase in South American engine shipments over the year-ago second quarter, the impact of consolidation of the company’s Blue Diamond Parts operations and increased intercompany activity aided by sales of its 11-liter and 13-liter MaxxForce engines.
Parts — The parts segment continues to deliver profits due to increased volumes in business in North America, which partially offset the impact of declines in U.S. military sales. The parts segment reported a second-quarter profit of $58 million, compared with a year-ago profit of $115 million, which was positively impacted by strong MRAP volumes.