Navistar promotes executive Clarke to CEO
LISLE, Ill. (AP) — Navistar shares surged Thursday after the truck and engine maker promoted its president and chief operating officer to CEO and sounded an optimistic note on its turnaround strategy.
The Lisle, Ill., company on Thursday posted a loss for its November-January quarter as revenue fell 12 percent. Demand fell across the industry and Navistar also lost market share because of its transition to a new kind of emissions technology.
But the interim CEO, Lewis Campbell, was upbeat. He said that the company is on the road back to profitability and that its new engine programs are progressing on schedule. He predicted that Navistar will begin to pick up market share in the second half of the year as it launches the new engine models.
Shares of Navistar International Corp. climbed 23 percent, or $5.67, to $30.63 in afternoon trading.
As sales slumped last year, Navistar launched a cost-cutting drive and said it would explore putting some of its businesses up for sale. It also averted off a proxy war with activist investors, including Carl Icahn, by adding board members aligned with them.
In the latest management twist, Troy Clarke, 57, will take over on April 15 from Campbell, 66, who is also executive chairman. Campbell, the temporary CEO since August 2012, will also be leaving the board while Clarke joins it. James Keyes, a board member since 2002, will become non-executive chairman.
Icahn released a statement later on Thursday lauding Clarke's appointment, calling him the "the leading force in improving the company's manufacturing operations and cost structure." Icahn added that he's confident Clarke will be able to make the moves needed to transform the company into the top North American heavy truck maker.
Amid Navistar's difficulties, the stock had dropped 38 percent over the past 12 months. Navistar posted a $3 billion loss last year as its revenue dropped 7 percent to $12.95 billion.
Losses continued into the company's fiscal first quarter. On Thursday, Navistar said it posted a loss of $123 million, or $1.53 per share, compared with a loss of $153 million, or $2.19 per share, in the same period the year before.
Excluding discontinued operations, the loss came to $1.42 per share. Revenue totaled $2.64 billion, down from $3 billion. Analysts, on average, expected a loss of $1.74 per share on $2.76 billion in revenue, according to FactSet.
The company reduced general and sales expenses, helping offset a decline in volumes.
The quarter's results and the company's cash level forecast "indicate a stabilization in the business and another positive step in (Navistar's) recovery process," said Jefferies analyst Stephen Volkmann in a research note.
Clarke, the new CEO, joined Navistar in 2010 after a 35-year career at General Motors. He had run Navistar's Asia operations before becoming president and COO. The incoming chairman, Keyes, 72, retired as battery and auto parts maker Johnson Controls Inc.'s chairman in 2003 after serving as that company's CEO from 1988 to 2002.
Campbell, who is leaving, retired as aircraft and defense supplier Textron's CEO in 2009 and as its non-executive chairman eight months later. Volkmann said his departure, which came sooner than expected, suggests that Navistar's turnaround is going well.