Re: Navistar Headlines

[cookiedan@domain.elided (Daniel Nees)]

Navistar Reports Second Quarter Earnings Highest in 25 Years
Higher Volume and Improved Margins Continue to Drive Results; Earnings
Again Exceed Analyst Estimates
CHICAGO, May 13 /PRNewswire/ -- Navistar International Corporation
(NYSE: NAV - news), producer of International® brand trucks, buses and
engines, today reported that earnings for the second quarter of its
fiscal year were the highest for the period in more than 25 years, with
diluted per share earnings up nearly 60 percent over the same period a
year ago. It marked the 10th consecutive quarter that per share earnings
exceeded the consensus estimate of financial analysts.
The company said that net income for the quarter ended April 30, 1999
rose to $96 million, or $1.42 per diluted common share, from $67
million, or $0.89 per diluted common share in the same period a year
ago.
Consolidated sales and revenues from manufacturing and financial
services operations for the second quarter totaled $2.3 billion, up 12
percent from the $2.0 billion reported in the second quarter of 1998.
Manufacturing gross margins for the quarter increased 3.5 percentage
points to 17.9 percent from the 1998 second quarter gross margin of 14.4
percent.
For the first six months of fiscal 1999, Navistar reported net income of
$157 million, or $2.33 per diluted common share, up from $105 million,
or $1.30 per diluted common share in the opening half of 1998.
Consolidated sales and revenues rose 12 percent to $4.2 billion from
$3.8 billion last year.
John R. Horne, chairman, president and chief executive officer of
Navistar, said second quarter results benefited somewhat from higher
volume but the main contributions came from ongoing productivity
improvement and the continued successful implementation of the company's
focused truck and engine strategies. Navistar's truck facilities at
Chatham, Ontario and Springfield, Ohio and its engine facility at
Indianapolis ran at capacity levels during the quarter, Horne noted.
``We continue to beat our quarterly results year to year, while also
making major investments in order to reach our long-term goal of a 17.5
percent return on investment over the business cycle,´´ Horne said.
``This accomplishment underscores the winning attitude of our employees,
who continue to show their ability to set ambitious goals and then
deliver on them.´´
Horne said that the 43 percent gain in second quarter earnings was
achieved even though Navistar continued to invest heavily in programs
designed to support future growth. He noted that the company has
budgeted $450 million for capital expenditures this year and will
increase spending for product development, new plant startup expenses
and costs associated with marketing the company's International brand by
$145 million to $165 million over the prior year spending.
``Demand is continuing at record levels and as a result, we recently
increased our 1999 industry forecast to 415,000 heavy and medium trucks
and school buses from the 380,000 forecast last fall,´´ Horne said.
Shipments of International brand heavy and medium trucks and school
buses during the second quarter totaled 36,100 units, a gain of 8
percent over the 33,600 units shipped in the second quarter of 1998.
``Truck and bus volume was consistent with our strategy,´´ Horne
said. ``We are not interested in simply chasing market share; however,
our market share at all times has to be large enough to develop and
maintain scale in all aspects of our business.´´
International operations continue to grow, Horne said. In Mexico, there
are now 54 dealer locations covering more than 90 percent of the
country. Also, the Brazilian market began to see signs of recovery and
Navistar received one of the largest single orders in the region in
recent years -- 200 trucks to a municipal government in Brazil. There
currently are 11 International dealers in Brazil.
Shipments of mid-range diesel engines to other original equipment
manufacturers during the quarter totaled 72,200, a gain of 29 percent
over the same 1998 period. Sales of service parts rose 3 percent to $223
million.
According to Horne, the company is addressing heavy truck capacity
constraints primarily through expansion of the company's assembly plant
in Escobedo, Nuevo Leon, Mexico. By October, the Escobedo facility will
have the ability to produce in excess of 50 premium heavy trucks per
day.
Second Quarter Developments
In addition to continued strong demand for diesel engines, Dan Ustian,
group vice president and general manager of the engine division, said
three significant developments occurred during the quarter that will
boost diesel growth in the years ahead, including the finalization of
two joint ventures and the announcement of a new assembly facility.
In March, Navistar finalized a deal to acquire a 50 percent interest in
Maxion Motores Ltda., headquartered in Brazil and the diesel engine
market share leader in the Mercosul market. The company was renamed
Maxion International Motores S.A. to reflect the addition of
International brand diesels to its product offering. The joint venture
will continue to produce the current Maxion products while adding the
7.3L V-8 turbo diesel engine from Navistar to the venture's product
line.
In another joint venture, plans were finalized with Siemens Automotive
Corporation to develop and manufacture next-generation diesel fuel
injectors incorporating proprietary digital valve technology under
license from Sturman Engine Systems, L.L.C. The fuel injectors will help
Navistar and its customers meet reduced diesel emission standards in
advance of the 2004 compliance deadline set by the Environmental
Protection Agency.
Finally, on April 23, Navistar announced that new high technology diesel
engines will be produced in Huntsville, Ala. An investment of $250
million will be made, contingent on ratification of incentives offered
by and through the State of Alabama.
``The Huntsville facility, scheduled to begin production in 2001, will
facilitate the transition from the current product to the
next-generation diesel engine and will strengthen our diesel technology
leadership position for the International brand and our OEM
customers,´´ Ustian said.
In other activity during the quarter, Navistar introduced restyled
International 9000i series of premium conventional trucks that feature
improved aerodynamics and fuel economy largely achieved with a
wraparound windshield that opens up the cab's interior, adding to
overall visibility. A new line of vehicles, the International 5000i
series, designed for construction, a municipal, forestry and refuse
customer was also introduced during the quarter.
Navistar International Corporation, with world headquarters in Chicago,
and 1998 annual sales and revenues of $7.9 billion, is a leading North
American producer of heavy and medium trucks and school buses. The
company is a worldwide leader in the manufacture of mid-range diesel
engines, which are produced in a range of 160 to 300 horsepower for the
International brand, and a private-label designer and manufacturer of
diesel engines for full-size pickup truck and van markets and selected
industrial and off-highway markets.

_____Dan Nees_____
cookiedan@domain.elided

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