Despite the economic slowdown, Navistar International says it expects to continue its recent string of profitable quarters into next year.

The company reported net income of $7 million for its fourth quarter, which ended Oct. 31. For the same period a year ago Navistar recorded a $105 million loss. Excluding a $190 million restructuring charge in 2000, however, this year’s fourth quarter results were $77 million lower than last year. Consolidated sales and revenue for the quarter were $1.8 billion, compared to $2 billion a year ago.
This was the third consecutive quarter that Navistar showed a profit, despite the industry-wide downturn in truck sales. For the full year, however, the company posted a net loss of $23 million on sales and revenues of $6.7 billion, compared to net income of $159 million on sales and revenue of $8.5 billion for fiscal 2000.
"Despite the tough economy and an even tougher industry climate, in August we were on track to be profitable for the year," said John Horne, Navistar chairman, president and CEO. "However, the events of Sept. 11 further weakened the economy, hampered our ability to get materials to our manufacturing sites on time, drove up costs and even caused some customers to defer orders." Horne cited catering companies that provide food services for the airlines and consumer goods delivery companies as two examples of customers directly affected.
Worldwide shipments of International trucks and buses totaled 89,600, including 43,700 medium trucks (mainly Class 6 and 7), 20,800 school buses, and 25,100 Class 8 trucks. Shipments in 2000 totaled 24,900 trucks and buses, including 56,500 medium trucks, 23,400 school buses and 45,000 Class 8 trucks.
Worldwide engine shipments totaled 394,300 units, up slightly from 392,900 units in 2000. The increases were due mainly to the inclusion of 42,200 units from Maxion Motors, renamed International Engines South America after Navistar became the sole owner this year. Without the inclusion of Maxion, engine shipments were down 40,800 units.
Navistar is forecasting U.S. and Canadian total truck industry retail sales volume in fiscal 2002 at 294,500 units, down 6% from the 312,700 units sold in fiscal 2001. Demand for heavy trucks is expected to reach 154,000 units, while demand for medium trucks is estimated at 112,500 units, including 87,500 Class 6-7 and 28,000 school buses. Navistar also noted that industry inventories have been reduced by approximately 33,500 units this year. If retail industry conditions don’t get worse, that means that industry production will likely increase to 294,500 units in 2002, up from 279,200 in 2001.
Horne emphasized that the company will continue to focus on greater profitability and lower breakeven levels at the bottom of the cycle. "The truck market in North America remains weak and this trend is expected to continue for at least another 12 months," he said. "Pricing on new and used trucks remains soft and will remain a challenge for the industry. We believe International is in a better inventory position than competitors, and our new high performance medium truck line should increase our appeal to segments of the market for which life-cycle value takes on more importance in a tough economic climate."