Navistar Falls After $2.77 Billion Fourth-Quarter Loss

Navistar International Corp. (NAV), the truckmaker under pressure from shareholders including Carl Icahn to boost its performance, fell the most since September after a $2 billion tax expense led a quarterly loss of $2.77 billion.

Navistar tumbled 8.5 percent to $20.92 at the close in New York, for the biggest one-day drop since Sept. 4. The shares have lost 45 percent this year.

Navistar, which has posted losses in three of the last four quarters, today also cited pretax charges totaling $252 million for warranty expenses linked to big bore engines, cost cuts, restructuring and engineering integration and non-conformance penalties. The company will exceed its goal of reducing structural costs by $175 million, Chief Executive Officer Lewis B. Campbell said in the statement.

While the truckmaker’s report was “messy” it provided “encouraging” details of its turnaround effort, David Leiker, a Milwaukee-based analyst with Robert W. Baird & Co., said in a note today. Leiker has an outperform rating on Navistar.

The fiscal fourth-quarter loss of $40.13 per share compared with net income of $255 million, or $3.48 a share, in the year- earlier quarter. The non-cash tax expense, which accounted for more than 70 percent of the per-share loss, was for an increase in deferred tax valuation allowance, the Lisle, Illinois-based company said.

Sales Decline

Lower sales, warranty costs and cost-cutting charges caused Navistar to lose $566 million on a pretax basis, down from a pretax profit of $275 million a year earlier, according to the statement. The company said it exceeded its guidance on liquidity by having $1.5 billion in cash and near-cash items.

Revenue for the period ended Oct. 31 fell 24 percent to $3.28 billion. That compared to an average estimate of $3.18 billion, according to data compiled by Bloomberg.

“We continue to make significant progress on our turnaround and the complexity of this quarter’s results is reflective of the actions necessary during this time of transition,” Campbell, who became Navistar’s CEO in August, said in the statement.

To contact the reporter on this story: Keith Naughton in Southfield, Michigan, at knaughton3@bloomberg.net;

To contact the editor responsible for this story: Jamie Butters at jbutters@bloomberg.net