Navistar reports 72% Q2 profit growth, but misses earnings expectations
Navistar International (NYSE:NAV) announced Tuesday a 72% hike in its second quarter profit, prompting the global transportation company to bump up the lower end of its full year guidance, but shares still declined as earnings came in below expectations and margins slipped.
The Warrenville, Illinois-based company posted a net income of $74 million, or $0.93 per share, in the second quarter ending April 30, compared to the previous year's $43 million, or $0.60 per share.
Adjusted to exclude the impact of engineering integration costs, which relate to the consolidation of Navistar's truck and engine engineering operations, and the relocation of its world headquarters, the company's profit for the quarter was $80 million, or $1.02 per share, missing analyst expectations of $1.17 per share by a wide margin.
Navistar's shares on the New York Stock Exchange fell 5.1% as of Tuesday morning, trading at $59.66 per share.
Despite the miss, the strong year-over-year increase prompted Navistar to hike up the lower end of its guidance for the full year ending October 31. Adjusted net income is now expected in the range of $427 to $465 million, up from the bottom end of $388 million.
Earnings per share, on an adjusted basis, are anticipated to be between $5.50 to $6.00, compared to the March 2011 projection of between $5.00 to $6.00 per share.
"We continue to see increasing customer acceptance of all our engine and vehicle families, confirming we have the right strategy in place and that we will deliver full year results toward the higher side of our previous guidance," said president and CEO, Daniel C. Ustian.
Navistar's revenues saw a 26% increase year-over-year to $3.4 billion, beating out analysts' expectations of $3.3 billion.
Revenue from the company's truck segment, which benefited from higher commercial volumes, favourable pricing and increased military sales, accounted for $2.3 billion in revenue, a 28% increase from a year earlier.
Meanwhile, Navistar's engine and parts unit also saw growth, with the company's engine segment drawing in $524 million, and the parts division bringing $512 million in the second quarter.
Quarterly gross margins slipped to 19.5% from 20.2% in the year-ago period.
"In the second quarter, our growth strategy continued to unfold as we introduced a number of products to the market place," Ustian added.
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