Navistar reported a net profit of $37 million for its third quarter, a turnaround from the same time last year which company leaders attributed in part to stronger truck sales and more efficient manufacturing processes.
It’s too early to say if the company’s improving finances will continue into the next few quarters, said Stephen Volkmann, an analyst from Jefferies Equity Research, which follows Navistar. But it’s one sign that the manufacturer’s efforts to cut costs and improve its reputation with customers is beginning to pay off.
The company’s Springfield plant is one of the largest employers in Clark County, where it employs more than 1,500 workers. Thousands of retirees also remain in the area.
“We don’t really know,” Volkmann said about the truckmaker’s future profitability. “But it’s a very encouraging sign. They’ve been working toward this a long time so it didn’t just come out of the blue. It’s been slow and incremental progress over the past two or three years.”
Truck sales increased about 10 percent compared to the same quarter last year, due to more sales in the U.S. and Canada and ramped up production of a cutaway model of GM’s G Van this year, company officials said. Workers in Springfield’s manufacturing facility began production of that vehicle this year.
Navistar’s revenues were up about 6 percent compared to the same quarter last year, primarily due to an increase in truck sales, according to information from the company.
Navistar and GM also previously made a separate joint agreement to build medium-duty trucks in Springfield. Those trucks will be available in both the International and GM brands, and will be produced with engineering input from both companies, Barlow said. Production on that vehicle is expected to start next year.
During the third quarter in 2016, Navistar recorded a net loss of $34 million.
The company took several actions this quarter that will improve the company’s bottom line moving forward, said Troy Clarke, president and CEO of Navistar in a conference call with investors. Navistar is closing its engine production operations at its Melrose Park Facility in Illinois by the second quarter next year, a move that will result in laying off 170 employees.
But company officials have said the engines produced at that site was a niche product, and the move will cut operating costs by about $12 million per year. Navistar also sold two businesses unrelated to truck production, including a parts fabrication plant in Arkansas and the remainder of Navistar’s fuel injector business.
Clarke also said he expects a solid fourth quarter on the horizon.
“It’s a prime selling season right now,” Clarke said. “I like our position. It feels good to be in on more deals this year than we were this time last and although the market remains competitive, we believe our investments in new trucks, buses and engines puts us in the best position that I’ve seen during my years at the company.”
The fourth quarter is traditionally strong for the company, but it’s too early to say whether that will continue into next year.
“It’s a milestone I’m sure they’re very happy they’ve reached,” Volkmann said of the recent profits. “It’s the result of a lot of hard work over an extended period and it’s encouraging that we’re seeing those results.”
The Springfield News-Sun has provided award-winning coverage of Navistar and the Springfield manufacturing facility’s impact on the region’s economy.
By the numbers
1,500: Navistar employees at its Springfield plant
$37 million: Net third quarter profit reported by Navistar
$34 million: Loss recorded by Navistar during the third quarter in 2016