U.S. manufacturer of International brand commercial trucks, Navistar International Corp (NAV.N), posted higher-than-expected quarterly profit. This is due to their strong U.S. military sales of armored fighting vehicles, though their overall sales fell short of forecasts and the company's shares went down 5 percent.
Earnings climbed for the first time in six quarters as military impacts boosted results. This year, Navistar's military business is taking on increased importance. According to a recent Jefferies research note, in February, the company got a $750 million order for mine resistant ambush protected trucks, the totality of which was filled during the latest quarter.
For the duration, the trucking industry has been bogged down in a sales downtrend as low freight volumes and decreased access to credit have kept trucking companies from retiring old trucks and buying new ones for their fleets, though, recently, shippers' conditions gained improvements.
Navistar disclosed the weakness in its core commercial vehicle market remains, which resulted to slashing its full year sales forecast. The company revealed that some military sales it had anticipated to book this year would be put on hold until 2011.
Its full-year gains forecast hinted a lower-than-expected fiscal fourth quarter, which began August 1.
The company, responsible for making variety of specialty trucks and buses, announced sales of those products both in the United States and Canada were up 7 percent from a year earlier in the fiscal third quarter. It is a relieving sign the industry is kicking back from its recession lows. Although, it said the state of economy is still difficult.
Navistar International Corp. announced a gain of $137 million, or $1.83 a share, for the quarter. Last year it posted a loss of about $12 million, or 16 cents a share. Revenue jumped 29% to $3.22 billion following last year's 37% dive.
According to Thomson Reuters I/B/E/S, analysts, on average,Ãƒ‚Ãƒ‚ are anticipating the Warrenville, Illinois-based company to announce a gain of $1.47 a share on sales of $3.57 billion.
Navistar's full-year sales forecast of $13.2 billion to $13.7 billion was cut down to a conservative forecast of $12 billion.
The truck manufacturing company still supports its full-year earnings forecast of $2.75 to $3.25 a share and promised to settle at the upper end of that range, revealing it had "found other measures to stay within previously anticipated earnings guidance."
JP Morgan analyst, Ann Duignan, said the third-quarter profits beat and the unchanged full-year earnings guidance hinted Navistar would announce a fiscal fourth quarter earnings of 27 cents to 77 cents a share.