Navistar off to sluggish start, but year looks promising

News AED February 19, 2003
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Navistar International Corp

Navistar International Corp., the nation's largest commercial truck and mid-range diesel engine producer, has reported a first quarter loss. The company is anticipating a slight second quarter dip, but still expects to be marginally profitable for FY 2003.


Navistar International Corp. said the loss totaled $98 million. Consolidated sales and revenues from the company's manufacturing and financial services operations for the first quarter totaled $1.6 billion compared to $1.5 billion in the first quarter of 2002.


According to John Horne, Navistar chairman and CEO, financial results for the first quarter were on target with expectations. Income this year versus the first quarter a year ago was impacted by higher postretirement expenses, higher costs associated with a delay of the V-6 engine program with Ford Motor Co., lower engine shipments to Ford and higher start-up costs associated with the ramp up of the new Ford Power Stroke V-8 engine.


On the positive side, Horne said the Blue Diamond joint venture with Ford continues on track. Pilot production of Ford's new medium truck began in December and the first shipments from the company's plant in Escobedo, Mexico, to Ford dealers in the U.S. began last week.


Turning to the 2003 outlook for new truck sales, the Navistar International chief said orders for new medium and heavy trucks would improve significantly in the third and fourth quarters of FY 2003. Horne noted that leading truck industry indicators such as pricing, used truck inventories and truck tonnages appear to have stabilized. Additionally, industry orders increased significantly in January for both medium and heavy trucks. Medium truck orders had been weak prior to January.


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