Navistar loses $16 million, warns fourth straight loss coming
Friday, August 16th 2002, 12:00 am
By: News On 6
CHICAGO (AP) _ Navistar International Corp. reported a third straight quarterly loss Friday, a $16 million setback, and disappointed investors by warning that a fourth is now likely amid continuing weak demand for new trucks.
As part of efforts to cut costs and improve operating inefficiencies, the parent company of International Truck and Engine Corp. said it is further shrinking its operations in Springfield, Ohio, by closing a body plant and the assembly plant's secondary production line.
The moves are expected to entail several hundred layoffs, although Navistar did not disclose the number of jobs being eliminated. Spokesman Roy Willey said workers were told this week that the assembly line will close this month and the body plant by the end of October.
Navistar employs 2,725 people, or about a fifth of its U.S. work force of 13,500, in Springfield. It has cut operations at the long-time truck-making base by nearly half in the past two years as industry sales have fallen. Willey said the latest reductions are part of previously announced plans to cut the number of employees to 2,200 or 2,300 by the time the restructuring is completed this year.
CEO John Horne said more cutbacks are planned within the company, but did not specify which plants are under consideration.
Navistar, which makes trucks, school buses and diesel engines, reported a loss of 27 cents a share in its third quarter compared with earnings of $2 million, or 3 cents a share, a year earlier. Sales edged downward to $1.59 billion from $1.6 billion.
The per-share loss was a penny better than the consensus 28-cent estimate by analysts surveyed by Thomson First Call. But Navistar also said the extended truck slump, coupled with an expected restructuring charge, means it now could lose 20 cents to 25 cents a share in the fourth quarter, which ends Oct. 31. Analysts had anticipated a profit of 36 cents a share.
Shares in the company fell $2.05, or 8 percent, to $23.03 in afternoon trading on the New York Stock Exchange.
Navistar said third-quarter results were weakened by the six-week strike at its heavy truck assembly plant in Chatham, Ontario. It also lowered its forecast of medium-truck sales in the current year by 4,000 to 97,500, attributing the decline to the continued sluggish economy.
Horne said weak demand is expected to continue over the next several months but the restructured company expects to be profitable in 2003 even if sales remain flat.
``We need to continue our focus to take costs out of our operations so that we have a flexible cost structure, which will make us a stronger, much more profitable company,'' he said.
On the heels of a $23 million loss for 2001, Navistar has lost $76 million, or $1.27 a share, for the first nine months of its 2002 fiscal year _ more than doubling its setback of $30 million, or 51 cents a share, for the comparable period a year ago. Sales declined 3.5 percent to $4.74 billion from $4.92 billion.
In addition to Springfield and Chatham, Navistar operates plants in Alabama, Arkansas, Illinois, Indiana, Oklahoma and Texas as well as Brazil and Mexico.