Navistar International Corp. has reported substantially improved earnings for its third fiscal quarter with net income for the three months ended July 31, 2004,
totaling $56 million, compared with $18 million a year ago.
Daniel C. Ustian, Navistar chairman, president and chief executive officer, said the third quarter profit was achieved despite increased costs associated with meeting 2004 emission requirements, increases in the price of steel and component shortages brought about by suppliers being slow to ramp up to meet increased industry market demand.
"Last December we defined a path to long-term success and third quarter results are consistent with that vision in spite of these challenges," Ustian said.
Manufacturing gross margins in the third quarter rose to 14.3%, up from 12.9% in the second quarter and above the 13.5% reported in the third quarter last year.
"Our focus continues to be on improving our competitiveness and our cost structure and we expect to achieve a $1,600 per vehicle manufacturing cost reduction in the current fiscal year," Ustian said. "We believe our truck and engine parts operations will achieve another record year and our finance subsidiary continues to be well positioned for profitable growth while significantly contributing to our bottom line."
Net income for the first nine months of fiscal 2004 totaled $88 million, compared with a net loss of $95 million in the first nine months of 2003. Consolidated sales and revenues for the first nine months of fiscal 2004 rose to $6.6 billion from $5.3 billion in the same period in 2003.
"Our ability to mitigate the impact of current economic challenges, principally the impact of the current steel situation and the fact that all truck manufacturers now are on allocation of 15-liter engines from Caterpillar and Cummins, will dictate how high earnings will rise this fiscal year," Ustian said. "More important, we are on a path of completing significant changes to the company that should provide solid earnings growth opportunities in 2005 and beyond."
Ustian noted that the company's heavy truck operations have shown the most dramatic improvement this year as the company continues on track to achieve a 20% market share over the long term. Retail deliveries of heavy trucks for the first nine months of the year were up 48% over a year ago. As the result of continued strong market demand, the company has added a second shift at its Chatham, Ontario, assembly plant with output scheduled at 560 units per week.
A year ago, Chatham was producing 175 units per week.
Worldwide shipments of International brand heavy and medium trucks and school buses during the third quarter totaled 28,100 units, up from the 21,200 units shipped in the third quarter of 2003. Shipments of mid-range diesel engines to other original equipment manufacturers during the quarter totaled 83,000 units, compared with 82,200 units in the third quarter last year.
Ustian said the company has raised its industry forecast slightly for the year from 328,500 units to 330,000 units, reflecting a decrease of 1,500 school buses and an increase in heavy trucks of 3,000 units to 211,000 units.