Navistar posts highest second-quarter earnings in 25 years

CHICAGO (May 13) — Navistar International Corp., the world’s fourth-largest producer of heavy trucks, reported its highest second-quarter earnings in more than 25 years, with diluted per share earnings up nearly 60% over the same period a year ago.

Net income for the quarter ended April 30, 1999 rose to $96 million, or $1.42 per diluted common share, from $67 million, or $0.89 per diluted common share in the same period a year ago.

It marked the 10th consecutive quarter that per share earnings exceeded the consensus estimate of financial analysts. Navistar chairman, president, and CEO John Horne attributed the gains to improved productivity at the company’s manufacturing plants.

Consolidated sales and revenues from manufacturing and financial services operations for the second quarter totaled $2.3 billion, up 12% from the $2.0 billion reported in the second quarter of 1998. Manufacturing gross margins for the quarter increased 3.5 percentage points to 17.9% from the 1998 second quarter gross margin of 14.4%.

Horne said the 43% gain in second quarter earnings was achieved even though Navistar continued to invest heavily in programs designed to support future growth. The company plans to spend $450 million on product development, new plant startup expenses, and marketing, and it recently increased its 1999 industry forecast to 415,000 heavy and medium trucks and school buses from the 380,000 predicted last fall.

Horne said Navistar planned to increase heavy-truck capacity primarily through expansion of its assembly plant in Escobedo, Mexico. By October, the Escobedo facility, which opened last year, will be able to produce at least 50 heavy trucks per day. Navistar’s plant in Chatham, Ont., builds roughly 120 trucks a day.

For the first six months of fiscal 1999, Navistar reported net income of $157 million, or $2.33 per diluted common share, up from $105 million, or $1.30 per diluted common share in the opening half of 1998. Consolidated sales and revenues rose 12% to $4.2 billion from $3.8 billion last year.