Navistar Lowers Outlook, Shakes Up Management

Navistar International Corp. has lowered its earnings forecast for the current fiscal year for the second time and reorganized its management after surprise quarterly loss.

The Lisle, Ill.-based maker of trucks and diesel engines originally expected to net $350 million-$400 million in the fiscal year ending Oct. 31. Navistar now predicts adjusted net results of breakeven to $140 million.

The revision follows the company's unexpected swing to a $172 million net loss in the fiscal second quarter ended April 30 from a $74 million profit a year earlier. The latest results were dragged down by warranty charges, regulatory fines, engineering costs and asset impairment charges.

Revenue slid 2% to $3.3 billion in the quarter. Navistar's truck and engine units lost $89 million and $108 million, respectively, compared with year-earlier profits of $92 million and $2 million. The company says its share of the North American heavy-duty truck market has skidded to 16% this year from 24% in 2010.

Navistar's troubles have been compounded by the failure of its 13-liter diesel engine to meet federal emission standards. The company, which said in March that it expected to be producing the engine by now, will no longer predict when the powerplant will be certified.

Navistar says it is overhauling management to better integrate its operations, effective July 1. Troy Clarke, currently president of Navistar Asia Pacific, will be responsible for all company operations as president of Truck and Engine. Clarke, a former president of General Motors Co.'s North America unit, joined the company in 2010.

Jack Allen, North American truck chief, will add responsibility for parts in that region. Engine Group President Eric Tech will become president of truck and engine operations outside North America. Dee Kapur, president of the truck group, is appointed vice chairman and chief product officer.