Navistar Rises as Quarterly Profit Beats Estimates on Trucks
December 21, 2011, 9:50 AM ESTBy Craig Trudell
(Updates with closing share price in second paragraph.)
Dec. 20 (Bloomberg) -- Navistar International Corp., the maker of International brand trucks, rose the most in almost three weeks in New York trading after reporting fourth-quarter profit that topped analysts’ estimates on vehicle margins.
Navistar rose 6.5 percent to $38.91 at the close in New York, the most since Nov. 30. Earlier, it gained as much as 11 percent, the most intraday since Oct. 14. The company pared its advance after telling analysts on a conference call that lower U.S. defense spending next year may hurt profitability.
The company, based in Lisle, Illinois, reported an adjusted fourth-quarter profit of $3.37 a share, beating the $3.09 average estimate of 13 analysts surveyed by Bloomberg. Truck segment profit more than tripled from a year earlier to $287 million as the company said it improved margins in North America while having “sustained” military sales. The company’s fiscal fourth quarter ended Oct. 31.
“We expect the industry to continue its steady recovery,” Daniel Ustian, Navistar’s chairman and chief executive officer, said in a company statement today. Navistar said net income rose almost sixfold to $255 million, or $3.48 a share, from $44 million, or 61 cents, a year earlier.
The billionaire investor Carl Icahn disclosed a 9.8 percent stake in Navistar in an Oct. 13 regulatory filing, making him the second-largest shareholder. Analysts such as Ben-Ari Elias of Sterne Agee & Leach Inc. have said Navistar may boost earnings by combining with Oshkosh Corp., the armored-truck supplier in which Icahn disclosed owning a 9.5 percent stake in June. Elias has an “underperform” rating on Oshkosh and a “buy” on Navistar.
Oshkosh ‘Synergies’
Navistar and its Oshkosh, Wisconsin-based rival have military and commercial businesses that “parallel each other,” Ustian said today on the conference call.
“There are some synergies in our two companies that they could be worked on together might make some sense for us, but there are some other parts in that business that make no sense for us at all,” Ustian said. “Some collaboration we think might be beneficial for everybody.”
Forklifts are an example of an Oshkosh product that doesn’t interest Navistar, he said.
Oshkosh rose 5.2 percent to $21.98 at the close in New York. The shares have plunged 38 percent this year.
Annual Elections
Navistar said last month it agreed to hold annual elections for directors after its management held talks with Icahn about adding members. Board members would hold one-year terms before needing to seek re-election, rather than the three-year terms as of now. The change is subject to clearance by shareholders.
Margins in Navistar’s military business will be “squeezed” as the U.S. reduces its budget and calls for more competition from companies next year, Archie Massicotte, president of the company’s defense unit, said on the call.
Navistar said in a slideshow presentation that it will seek opportunities with foreign military, especially in the Middle East, where it says defense spending is growing.
The company said it bought back 2.7 million shares of its stock in the quarter and expects to complete its full $175 million repurchase program early next year.
--Editors: Jeffrey Tannenbaum, Bill Koenig
To contact the reporter on this story: Craig Trudell in Southfield, Michigan at ctrudell1@bloomberg.net
To contact the editor responsible for this story: Jamie Butters at jbutters@bloomberg.net
