Despite a sluggish economic outlook and a number of dwindling markets, Navistar International Corporation reported higher-than-expected second quarter earnings in 2016.
In the face of slower than anticipated domestic market share growth, weaker export markets and the impact of a stronger dollar, the company announced a net income of $4 million for the second quarter of 2016.
This time last year, Navistar saw $64 million in second quarter loses. The recent financial momentum was driven by strong cost management and product cost improvement.
“For the first time since we launched our turnaround more than three years ago, Navistar reported a quarterly profit,” said Troy Clarke, president and CEO for Navistar.
One of the advances over the past year came via Navistar’s connected vehicle program OnCommand Connection, the open-architecture remote diagnostics service that helps achieve improved on-road uptime for trucks and buses.
The company also maintained that its medium-duty school bus sales will grow in 2016 compared to the previous year, as the company is “the market leader in bus, and we’re excited about the continued progress we are making in the overall quality of our buses,” said Jim Spangler, vice president of corporate affairs and chief communications officer for Navistar.
Overall company revenues were down 18 percent from $2.7 billion in 2015 to $2.2 billion currently, the decline attributed to lower volumes in core markets in the U.S. and Canadian, softer industry conditions and the discontinuation of the company’s Blue Diamond Truck joint venture.
“We are confident we will generate and implement additional performance improvements to partially offset current industry conditions,” Clarke said.
The company saw lower engine volumes in Brazil from the ongoing political and social strife that afflicts the country, resulting in a weakened economic condition.
“The fact that we earned a profit despite lower Class 8 truck volumes that impacted the entire industry underscores the tremendous progress we continue to make in managing our costs effectively and improving our operations,” Clarke said.
The drop was partially offset by higher sales in the company’s parts segment, which achieved record quarterly profits, showing that “our performance this quarter begins to demonstrate the earnings potential of this company,” Clarke said.
It was also revealed that Navistar is on track to exceed its goal of $200 million in cost reductions for this year from cuts in materials expenditures and manufacturing savings.
Spangler asserted that there is still progress to be made as the company moves forward with preparations to launch a number of new products seen as “game changers.”
“We’ll continue to face some industry headwinds in the second half of 2016. That said, we feel very good about the momentum that we are building,” Spangler said.
