M – Navistar International Corp named a new chief executive as the truck and engine maker indicated it was on the road to recovery by forecasting market share gains in the second half of the year, pushing its stock 26 percent higher on Thursday.
The company said Chief Operating Officer Troy Clarke will take over as CEO, replacing Lewis Campbell, a former Textron Inc chief. Campbell took over as interim CEO in August after Navistar fired Daniel Ustian over the failure of its new generation diesel engines.
Under Campbell, Navistar cut jobs, sold interests in non-core joint ventures, raised money by selling shares and avoided a proxy fight with Carl Icahn by agreeing to appoint new board members.
"Our turnaround is well underway and is gaining momentum, which is why we are now ready to put a longer-term CEO in place," Campbell said on a conference call with analysts. "We can see the end of the runway and it looks very good."
Shares of Navistar, which also reported a narrower quarterly loss and an improved cash balance on Thursday, were trading up more than $6 at $31.45 on hopes that the worst is over for the company.
Campbell said he recommended to the board that Clarke be promoted. Clarke joined Navistar from General Motors in 2010. He was named COO last year.
The appointment was unanimously approved by the board and had support of the company's major investors, Campbell said, without naming the shareholders.
Icahn is Navistar's third-largest shareholder and his former adviser, Mark Rachesky, the second biggest. Both had last year agitated for change in the company's management and product strategy.
Navistar had struggled with profitability after the U.S. Environmental Protection Agency denied approval for its new diesel engine. Unlike rivals Paccar Inc and Volvo AB , the company was attempting to limit emissions of the greenhouse gas nitrogen oxide without using additive urea.
Navistar later abandoned that effort and is currently sourcing the engines from rival Cummins Inc while it develop a new model with technology more in line with industry standards. It is still paying fines for every noncompliant engine it had installed.
First-quarter loss narrowed to $123 million, or $1.53 per share, from $153 million, or $2.19 per share, a year earlier. Excluding discontinued operations, it reported a loss of $1.42 per share.
Manufacturing revenue fell 12 percent to $2.6 billion.
Analysts expected a loss of $1.76 per share on revenue of $2.81 billion, according to Thomson Reuters I/B/E/S.
Navistar expects its market share to start improving in the second half of 2013 and said cash balance at the end of the first quarter was $1.19 billion, above its forecast range of $950 million to $1.05 billion.
The company forecast cash balance of $1 billion to $1.1 billion at the end of the second quarter.
Lisle, Illinois-based Navistar said it was on track to exceed its goal of reducing structural costs by $175 million this year.
The company said it has also identified additional cost savings to further lower its breakeven point in 2013. (Reporting by A. Ananthalakshmi in Bangalore; Editing by Rodney Joyce, Supriya Kurane)