NAV to Bear Restructuring Charges - Analyst Blog

According to Reuters, Navistar International Corporation ( NAV ) will be incurring a charge of $40 million to $60 million in the fourth quarter of 2012 associated with its headcount reduction program. Earlier this month, the company offered an opportunity to most of the U.S. based non-represented salaried employees to apply for the voluntary separation program. The company also planned to undertake involuntary reduction of workforce in a bid to achieve its goal.

Separately, Navistar Financial Corporation (NFC), the subsidiary of the company's Financial Services segment, has announced the renewal and increase of its largest dealer inventory funding facility to $750 million. This will provide greater flexibility in funding wholesale assets.

The $750 million facility will be funded by the three major relationship banks of NFC. In addition, the deal will support the company's long-term strategy to support the dealer network and improve the sale of Navistar products. In the second quarter of 2012, the company's inventories increased 14% to $1.95 billion from $1.71 billion in the corresponding quarter last year.

Warrenville, Illinois-based Navistar manufactures and sells commercial trucks, mid-range diesel engines, buses, military vehicles and chassis for motor homes and step-vans. It also provides service parts for various trucks and trailers. The company's U.S. controlled domestic competitors include Ford Motor Co. ( F ) and PACCAR INC. ( PCAR ).

Currently, Navistar retains a Zacks #5 Rank, which translates into a short-term (1 to 3 months) Strong Sell rating. The company faces difficulty in obtaining U.S. regulatory approval for the new generation of its diesel engine. We have a long-term (more than 6 months) Underperform recommendation on the stock.

FORD MOTOR CO (F): Free Stock Analysis Report

NAVISTAR INTL (NAV): Free Stock Analysis Report

PACCAR INC (PCAR): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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