Navistar falls after loss, forecast cut and management shakeup
Lisle-based Navistar International Corp. fell 11 percent after reporting a surprising loss, lowering its forecast for a second time this year and reassigning top managers as it works to develop an engine that meets 2010 emission standards.
Navistar fell $3.15 to $25 at 8:34 a.m. before the start of regular trading in New York. The shares had fallen 26 percent this year before today after tumbling 35 percent in 2011.
Navistar lowered its annual profit forecast to a range of break even to $2 a share. It had an adjusted loss of $137 million, or $1.99 a share, in the three months ended April 30. Analysts had estimated profit of 67 cents, the average of 15 estimates. Warranty costs for the non- compliant engines reduced profit by $104 million.
“Certainly, our first-half performance was unacceptable,” Dan Ustian, Navistar's chief executive officer, said in a statement. “We've identified a path for delivering strong profits in the second half of 2012.”
In March, the company forecast profit of as much as $5.25 a share, down from a February forecast of as much as $5.75. The average of 17 analysts' estimates was for an annual profit of $3.79 before today.
The net loss was $172 million, or $2.50 a share, compared with a profit of $74 million a year earlier.
Navistar has struggled to develop a 13-liter engine that meets U.S. Environmental Protection Agency certification for its 13-liter engine at 0.2 gram of nitrogen oxides. The company said today it is “working tirelessly with the U.S. EPA to get resolution.” A lack of certification cost the company $10 million in penalties in the quarter.
Management Changes
Navistar said today that Troy Clarke, president of Navistar's Asia Pacific region, will be in charge of Navistar's truck and engine operations, including parts, product development and purchasing. Clarke joined Navistar in 2010 after a 35-year career at General Motors Co. and its predecessor.
Jack Allen will run truck and parts in North America. He's currently president of the North American truck group for Navistar. Eric Tech, head of the engine group, was named president of global truck and engine, Navistar said in the statement. All changes take effect July 1, the company said.
Dee Kapur, president of Navistar's truck group, was named vice chairman and chief product officer, Karen Denning, a spokeswoman for Navistar, said in an e-mail. Phyllis Cochran, president and Navistar parts, will join Navistar Financial Corp., Denning said.