By Bob Tita
Navistar International Corp. narrowed its fiscal fourth-quarter
loss, but success in increasing its share of the truck market
remains elusive.
The company reported a pretax profit for the quarter ended Oct.
31, excluding special charges, that was in line with the company's
guidance, but well below analysts' expectations. Moreover, the
company's first-quarter outlook was far below analysts' estimates,
triggering a steep selloff of Navistar's stock.
The Lisle, Ill.-based company so far hasn't been able to
leverage much share gains from the red-hot demand for commercial
trucks in North America. Production of heavy-duty trucks this year
is on course for the highest volume since 2006. Navistar remains in
fourth-place in the market behind Volvo AB, Paccar Inc.--the maker
of Peterbilt and Kenworth brands trucks--and Daimler AG's
Freightliner unit.
The company finished its fiscal year with a 17.5% market share
in medium- and heavy-duty commercial trucks in the U.S. and Canada,
according to analyst calculations. That is roughly flat with 2013,
and well off the company's goal of 21% for 2014. In the market for
heavy-duty trucks, the largest segment of the commercial-truck
market, Navistar's share was 14%, a percentage point higher than in
2013, but four points less than its 2012 share. Heavy-duty trucks
are those that weigh more than 33,000 pounds.
"There seems to be a gap [in the market-share gains] but they're
starting to come," said Chief Executive Troy Clarke during remarks
to analysts Tuesday. "When I look at the order board, I see some
very encouraging signs."
Navistar's market share began eroding in 2012 when the company's
engines weren't able to comply with tougher federal standards for
diesel-engine exhaust after Navistar pursued an emissions-treatment
technology that differed from the rest of the truck industry.
Moreover, trucks the company sold in 2010 and 2011 were beset by
engine-reliability problems that caused the company's warranty
costs to swell.
Under Mr. Clarke, who became CEO in April 2013, Navistar fixed
its engine problems and began using exhaust-treatment components
and popular engine models built by Cummins Inc. The moves were
expected to help Navistar recover market share, but executives said
the gains haven't come as quickly as anticipated. They attributed
some of the sluggishness to the pace at which Cummins-made
exhaust-treatment components have been paired with Navistar's
engine models.
"We're closer to being done, but we're not done. We still have
some [engine] segments that would be completed in 2015," said Bill
Kozek, president of the company's truck and parts segments.
Navistar continued its long stretch of losses during the fourth
quarter, albeit at a lower level than last year because of higher
truck volumes and lower expenses for warranty claims and other
one-time charges. The truck business reported a fourth-quarter loss
of $55 million, compared with a loss of $355 million last year.
Profit from its parts business slipped slightly to $143 million
from $147 million a year earlier.
Overall for the quarter, Navistar reported a loss of $72
million, or 88 cents a share, compared with a year-earlier loss of
$154 million, or $1.91 a share. The latest period included $60
million in restructuring charges and write-downs. Revenue grew 9.3%
to $3.01 billion.
Excluding charges for warranties expenses and other items,
Navistar reported a $116 million profit. But analysts were
expecting $163 million in profit and revenue of $3.02 billion. For
the first quarter of 2015, Navistar forecast profit excluding
charges to be in a range of flat to $50 million, compared with
analysts' forecast of $143 million in charge-adjusted profit.
Chelsey Dulaney contributed to this article.
Write to Bob Tita at robert.tita@wsj.com
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