Navistar 3Q profit falls; reviews business units
LISLE, Ill. (AP) — Heavy truck and engine company Navistar International says that its third-quarter earnings tumbled from results a year ago that included a large tax benefit.
The company outlined a cost-cutting plan and is reviewing its noncore businesses. This could mean that the company is considering selling some or all of those businesses.
President and Chief Operating Officer Troy Clarke said during a conference call that about 500 people are in the process of leaving the company through voluntary buyouts. It anticipates reducing the workforce by an additional 200 people, which is expected to be completed in the fourth quarter.
Navistar said that the buyouts and job cuts are expected to result in $70 million to $80 million in annual savings. Navistar's overall goal is to cut costs by $150 million to $175 million year over year, beginning in fiscal 2013.
A company representative could not be immediately reached for more information about the buyouts and job cuts.
The company is also boosting efforts to lower discretionary spending and lower its material costs further as part of its overall cost-cutting efforts.
Navistar shares jumped $3.13, or 15.3 percent, to $23.54 in afternoon trading. The stock has traded between $19.79 and $48.18 over the past year.
Navistar, whose CEO stepped down last week, said it earned $84 million, or $1.22 per share, for the three months ended July 31. That compares with $1.4 billion, or $18.24 per share, a year earlier.
The current quarter's results included a $196 million tax benefit as well as $16 million in engineering integration costs and $10 million for some penalties. The prior-year period included a $1.48 billion benefit as the company released part of its income tax valuation allowance.
Revenue dropped to $3.32 billion, down 6 percent from $3.54 billion. Navistar said that the performance was dragged down by lower sales in its U.S. and Canadian truck and engine segments mostly because of reduced military sales and lower engine volumes in South America.
Wall Street expected revenue of $3.03 billion.
Last week Daniel Ustian informed Navistar International Corp.'s board that he was immediately retiring from his roles as chairman, president and CEO, and that he was leaving the company's board. Ustian had been with the company for 37 years.
The Lisle, Ill., company named Lewis Campbell, the former chairman, president and CEO of Textron Inc., as its executive chairman and interim CEO.