Navistar International Corp. has reported second quarter earnings of $41 million, compared with a net loss of $14 million for the same period last year. Navistar states quality improvements and on-going cost reduction initiatives have placed the company on track for a profitable year.

The company attributes its profits to bolstered sales because of the economic recovery, as well as increased margins as the company progresses toward its target of reducing vehicle costs by $1600 per unit in 2004.

Second quarter revenues from its manufacturing and financial arm were up, totaling $2.3 billion— a $400 million increase over the same period last year.

Daniel Ustian, Navistar chairman, president & CEO, said the company expects to sell 328,500 Class 6-8 trucks and school buses in the United States and Canada in the fiscal year ending October 31, 2004. Ustian cited recent economic improvements and strong truck orders as positives for the company.

“Our Class 8 market share in the second quarter increased to 18.6%, the highest since the third quarter 1998,” Ustian said. “Recovery in the heavy truck sector is spread across our whole consumer base and indications are that current demand levels for heavy trucks will continue.”

A portion of Navistar’s strong sales is a result of advance orders with delivery schedules pushing to 2005.

“While some of the orders that have pushed the market in recent months are for delivery beyond our current fiscal year, the recent increase in industry production is a positive sign that customers are taking deliveries now to replace vehicles and are looking to expand their fleets,” Ustian said.

The recovery of medium-truck orders took a slow and steady approach, compared to heavy trucks.

“We are very comfortable with the current balance between orders and deliveries for the Class 6-7 market, where we are the strong market leader,” Ustian said.

Although high commodity costs have been a detrimental factor for the company, International has been able to pass on some of the high material costs to buyers.

“We were impacted by supplier surcharges to cover the rising cost of steel. We have instituted our own steel surcharge. However, we are still sharing the pain of increased steel costs with our suppliers and our customers,” Ustian said.