Navistar posts first loss since Q2 2019, reflecting slower freight economy

Dive Brief:

Navistar International, a major truck manufacturer, reported its first loss since the second quarter of 2019.
The decrease was driven by a 39% drop in the company's core business, Class 6-8 trucks and buses in the United States and Canada, according to Navistar officials.
Navistar posted a loss of $36 million, or 36 cents per share, in its first quarter of 2020, which ended Jan. 31. The Lisle, Illinois,-based manufacturer generated revenues of $1.8 billion, down 33% from the same quarter in 2019. Its results show a drop largely before COVID-19 began to spread widely. Navistar issued guidance for the remainder of its 2020 fiscal year, but conditioned it upon any change to operations from the novel coronavirus spread.

Dive Insight:

Don Ake, FTR vice president for commercial vehicles, said fleets were slowing down orders because of 2019's weaker freight market. Then COVID-19 showed up in North America.

"The market was already in a wait-and-see mode before the virus spread," Ake said in a March 3 news release. "Now, fleets are just waiting for things to calm down before returning to normal ordering patterns. The industry was already taking a pause after two years of great sales. The current uncertainty has just made more fleets leery of taking on additional risks."

Navistar's quarterly results are not dissuading overall company growth plans. Navistar said it broke ground on the expansion of its Huntsville, Alabama, engine plant in February. The company will invest $125 million in the manufacturing facility to produce powertrains being developed with Navistar's global alliance partner, Traton.

For the remainder of 2020, Navistar expects to make deliveries of Class 6-8 trucks and buses in the U.S. and Canada in the range of 335,000 to 365,000 units, with Class 8 deliveries estimated at between 210,000 and 240,000 units.

Revenues will be in the range of $9.25 billion to $9.75 billion, the company forecasted. It reported revenues of $11.3 billion for its 2019 fiscal year, ended Oct. 31, with net income of $221 million, or earnings of $2.22 per diluted share.