John D. Boyd | Dec 22, 2010 12:47PM EST
Heavy truck and engine maker Navistar International reported a 55 percent drop in net earnings for its fiscal fourth quarter that ended Oct. 31, to $39 million from $86 million a year earlier.
Navistar said the quarterly results were in line with its earlier projection to deliver more than 17,000 trucks in the U.S. and Canada that meet 2010 emission standards. The results reflected cost increases linked to a new labor contract that Navistar said should also give it a competitive cost structure going forward.
"The North American truck market has been depressed for three years now, and the company has been able to provide good profits while investing in the future growth," said Daniel C. Ustian, Navistar's chairman, president and CEO. "The company is well positioned to take advantage of the growing North American market as well as expanding globally."
Total sales for the quarter -- mostly from trucks, engines and parts but including finance revenue -- rose 2.6 percent to $3.372 billion. Net income attributable to Navistar operations was less than 1.2 percent of sales, down from a 2.6 percent margin in the 2009 period.
For the full year ending in October, Navistar sales rose 5 percent to $12.145 billion, while profit fell 30 percent to $223 million. But the year-earlier results included a $160 million settlement from Ford Motor Co. as it shed a Navistar engine contract.
In Navistar's core truck segment, the company had a 2010 profit of $424 million, up from $147 million in 2009 as the commercial vehicle market improved. Navistar builds International brand trucks for the heavy duty market, plus buses and armored military vehicles.
Its engine unit lost $17 million for the final 2010 quarter but earned $51 million for the year, after $253 million in 2009, as it transitioned from the Ford business and had ongoing costs with the launch of 2010-compliant engines.
Navistar's profit from parts sales fell to $266 million in 2010 from $436 million in 2009, but the company said that was due to a large decline in military business. Its commercial parts business rose 15 percent, Navistar said, from rebounding markets for Class 6-8 trucks and buses.
-- Contact John D. Boyd at jboyd@joc.com.