Tough start for Navistar

Navistar has released its financial results for the first quarter of the year, the firm reporting a net loss of $US248 million

Navistar has endured a rough beginning to the calendar year, with the company posting a net loss of $US248 million and revenues of $US2.2 billion. That’s a significant drop from the corresponding period for the previous year, when the firm reported a net loss of $US123 million and revenues of $US2.6 billion.

The company says it’s been hit hard by slowing military sales and its medium-duty emissions strategy transition, although there were some rays of hope in its latest financial report.

Navistar ended the quarter with $US1.1 billion in manufacturing cash – a figure at the high end of its guidance – and delivered an adjusted EBITDA figure significantly better than its guidance (a loss of $US37 million – guidance projected a figure of between $US50 million and $US100 million).

On a positive note, profits were recorded in Navistar’s parts business in North America and its financial services division. The company also recorded $US67 million in reduced structural costs.

According to Navistar’s President and CEO, Troy A. Clarke, this year was never going to be easy.

“We signalled that this would be a tough quarter due to our mid-range product transition, the ongoing reduced sales in our military business, and because the first quarter, historically, represents the weakest operational period of the year for us,” he said.

“Given all this, we are encouraged we hit our cash and adjusted EBITDA guidance. Clearly, we have more hard work to do to rebuild our market share and further reduce our costs, but we continue to make progress on our ‘Drive to Deliver’ and we feel we’re off to a solid start in 2014.”

The year began well with the International ProStar with Cummins ISX15 engine and International TerraStar 4x4 (pictured) named 2014 Heavy-Duty Commercial Truck of the Year and 2014 Medium-Duty Commercial Truck of the Year at the American Truck Dealers Convention and Exposition in January.

More recently, Navistar announced it would consolidate its mid-range engine manufacturing at its Melrose Park facility in Illinois – a move that will reduce the firm’s operating costs by an estimated $US22 million annually.

Next up is the addition of Selective Catalytic Reduction (SCR) emissions technology in its high-horsepower in-line six-cylinder engine.

“These actions will help us deliver on one of our biggest opportunities – reclaiming our market position in medium-duty and bus, which historically have been important businesses for us and our dealers,” Clarke said.

“We’re gaining momentum in the marketplace. As we fully launch our mid-range SCR portfolio in the coming months and complete this phase of our engine restructuring, we anticipate we will improve our financial performance throughout 2014 and remain on path to achieving our guidance of an eight to 10 per cent EBITDA margin run rate exiting 2015.”

Tough start for Navistar

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