Navistar International Corporation has blamed a large write own of its used truck industry and poor new truck sales for its US$80 million loss in the second quarter, miles behind the $4 million profit the company declared in the same time last year.
The poor performance has US based finance analysts speculating that Volkswagen is likely to increase its stake in the brand, potentially even taking it over entirely.
Volkswagen’s acquisition of a 17 per cent stake of Navistar closed in the second quarter, with VW taking two seats on the board for its $256 million investment.
According to Stifel Financial Corp analyst Michael Baudendistel, the German marque could be looking to take a controlling share of the American company in order to save it.
“We believe that the company is on more solid footing currently than it has been because of the strong recent industrywide truck orders, the company’s expanded partnership with Volkswagen — which may ultimately acquire a larger share of Navistar or the entire company — the company’s refreshed product line, and our view that the company’s market share in the US Class 8 market has likely already bottomed,” Baudendistel said.
Revenue dipped five per to $2.1 billion over the past three months as a result of fewer sales, but CEO Troy Clarke sees a turnaround coming in the back half of the year.
“We are on track to improve on last year’s results, but still have quite a bit of work to do in the second half,” he said.
“However, the work we’ve done in the first six months growing share, building our backlog, and managing costs, combined with improving industry conditions, positions us to deliver a stronger second half.”
The big hit to earnings came from Navistar’s move to add $60 million to its used truck reserve as it works to liquidate its MaxxForce 13 used truck inventory.
“We are taking an important set to put legacy issue behind us, which have been masking underlying improvements in our financial results,” Clarke said.
