Navistar loses $154M in fourth quarter, mostly due to 2010 engine warranty claims

| December 20, 2013

MaxxForce

Shedding pre-existing warranty adjustments is practically Navistar’s final hurdle to jump as it seeks a return to profitability.

Navistar announced Friday, Dec. 20, it had slashed its quarterly losses in the fourth quarter but still reported a net loss of $154 million. The quarterly numbers compared favorably to a fourth quarter 2012 net loss of $2.8 billion and helped trim the company’s net loss for fiscal year 2013 to $898 million versus a net loss of $3 billion for fiscal year 2012.

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In the company’s earnings call Friday, Navistar Chief Executive Troy Clarke noted the company’s Q4 loss was primarily due to unanticipated pre-existing warranty adjustments for its EGR-only engines, something that has been a drag on the company’s profitability all year.

Navistar’s CFO, Walter Borst, said the company could have seen a net gain of $5 million in the quarter had it not been for the warranty hits and asset impairment charges.

Navistar is at the half-way mark of its maximum warranty exposure, however, Borst said, as most of the company’s 2010 EGR-only engines are in the extended warranty period. They should be completely cycled out by the end of 2015, he said. 

Moreover, Navistar points to 2015 as the year it will return to profitability. 

In its earnings call, Navistar said Class 6-8 orders rose 12 percent in the fourth quarter over the third quarter and were up 34 percent from the same quarter in 2012. Its Class 8 market share — in terms of retail — hit its highest point of the year, 16 percent. 

2014, Clark said, “will be a better year for Navistar” than this year.

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  • Henry

    Gee, what a mystery… how could it possibly be that Intertrashional had problems with their engines?? I was never so happy to get rid of a truck in my 40 years of trucking as I was my 2010 Prostar. It spent more time in the shop than it did on the road, and most of the problems were engine related. What a POS. How they stay in business is the real mystery.

  • Bob

    So true… real problems with the engine. However, they’ve spent millions not only fixing the problems but ultimately making good on the warranties. It is a extremely fuel efficient combination when installed in a Prostar. Sorry you had so many problems…

  • guest

    I have had nothing but problems from my 2011 prostar. the check engine light never stays off for more than a week and it uses 6 gallons of oil in 25000 miles. I can only hope that I can get rid of this POS and they never have to worry about seeing me in another one. they have tried everything to stop the oil usage but changing the motor which is where they should have started. they have spent more money (almost double) than a new motor cost. plus all the down time has killed my bottom line but they don’t care about mine just theres and as soon as your warranty runs out you will go bankrupt and they know it.