Navistar reported a net loss of $33 million Tuesday for the first quarter, but company leaders and analysts said it’s still on track to become profitable this year.
The manufacturer declined Tuesday to comment on recent reports that it could be sold but did say it’s looking at more partnerships.
Navistar has made strides to cut costs and become more efficient, said Walter Borst, executive vice president and chief financial officer for the manufacturer.
It’s a significant employer in Clark County, where it employs about 1,500 workers at its Springfield manufacturing plant. Thousands of the company’s retirees also live in the area.
“This was a solid quarter in which we made real progress toward our 2016 targets,” Borst said.
The truckmaker reported revenues of about $1.8 billion, a decline of about 27 percent compared to the same time last year. Navistar leaders cited several factors, including weak economic conditions in Brazil and lower exports from Mexico in part due to a stronger U.S. dollar.
Although revenues were down, the losses narrowed compared to the first quarter of last year.
The company also unveiled its new HX series of trucks last month and plans to refresh its entire product line by 2018, said Troy Clarke, Navistar president and CEO.
“We expect to announce a new product every six months, which will renew our entire product line by 2018,” he said.
Navistar has shown signs of improvement in what is typically the weakest financial quarter of the year for the trucking industry, analysts said.
“In the past I’ve characterized it as sort of slow and steady and I think this quarter was another quarter of slow and steady progress,” said Steve Volkmann, an analyst from Jefferies Equity Research who follows Navistar. “They were able to cut some structural costs and their warranty expenses continued to go down so I think they are doing exactly what they need to do.”
Last year Navistar reached a joint agreement with GM that is expected to bring at least 300 new jobs to Springfield, including about $32 million in investments at the plant. The new trucks that would be produced as part of the deal are expected to go into production in 2018.
In an interview with Reuters last week, Clarke said the company could do more partnerships like the GM deal if it remains a standalone company. Navistar has previously worked with Ford and Caterpillar.
Clarke also said, “there are companies out there that could use our ability to do that kind of stuff to grow their footprint in North America.”
Those comments lead many analysts to wonder if the company could be sold.
Jim Spangler, a Navistar spokesman, declined to comment Tuesday on the possibility that Navistar could eventually be sold.
“Troy (Clarke) has been talking about partnering for a long time,” he said. “This is not something new and we’re going to look for opportunities to partner. What we won’t do is speculate on what those future opportunities would be.”
The Springfield facility will continue to be an important part of the company’s footprint, Spangler said.
The heavy truck market is expected to continue to consolidate over time, Volkmann said, with a few, large companies dominating the market.
But talks of a potential sale are unlikely in the short term, he said, while Navistar works to improve its bottom line.
“This is an expensive business with engine development and safety development and regulations, so to be able to spread those costs across a global platform is obviously attractive,” Volkmann said. “I don’t think it’s anything they need to do right away but certainly those types of scenarios have been discussed for several years. My guess is they need to continue to fix the core business and show that it’s a reasonable business before they’d be particularly attractive to anybody else.”
Springfield’s increasingly important role with the company makes it unlikely that any sale or new partnerships could hurt workers here, Volkmann said.
“I can’t imagine a situation where somebody would come in and buy it and close everything down, that wouldn’t make any sense,” he said. “If you buy it, it’s because you want exposure to the United States and North American markets.”
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