Navistar International Corporation (NYSE: NAV) will present the 2020-24 strategy, “Navistar 4.0,” at its Investor Day event today, laying out a plan to increase the company’s EBITDA margins to 12%.
Navistar 4.0 includes the following elements:
Improve EBITDA margins to 10% by 2022 and 12% by 2024;
Grow market share and become the number one choice of the customer through new product offerings and customer segmentation;
- Implement a single platform strategy to optimize use of R&D resources and commonization of parts and tooling;
- Increase modular design resulting in customer benefits, speed to market and lower product costs;
- Build a new truck assembly facility in San Antonio, Texas, reducing logistics and manufacturing costs;
- Use the TRATON alliance to provide significant procurement savings, more efficient R&D spend and new integrated powertrain offerings for customers;
- Grow Aftersales revenues with an expanding distribution network, growing private label sales and e-commerce initiatives;
- Improve financial results allowing the company to invest in growth initiatives, de-lever the balance sheet and fully fund its defined benefit pension plans by 2025.
- Building on the major advances achieved in the last five years, including gains from an alliance with TRATON Group, Navistar 4.0 lays out a clear path for the company’s ongoing transformation.
- “Navistar is committed to building on the gains of the past five years to improve financial returns to shareholders,” said Troy A. Clarke, Navistar chairman, president and chief executive officer. “Navistar 4.0 establishes a clear road map to grow EBITDA margins to 12%, while also winning in the marketplace.”
Announces $250 Million Investment in New Manufacturing Plant
Building on the recently announced $125 million investment in the Huntsville engine plant, Navistar also intends to create the most cost-competitive manufacturing network in the industry. For this reason, as part of Navistar 4.0, the company separately announced its intent to invest more than $250 million in a new, industry benchmark assembly facility in San Antonio, Texas, contingent on incentive approval.
“The new facility will have the flexibility to build Class 6-8 trucks incorporating the most advanced lean manufacturing practices, enabling lower conversion costs and an optimized supply chain,” said Persio Lisboa, Navistar’s chief operating officer.
Procurement and Product Strategy Builds on Success of TRATON Alliance
Another contributor to Navistar’s future improvement is the alliance with TRATON Group. Increased benefits from the two companies’ procurement joint venture are achieved by leveraging global scale, ultimately through common powertrains and other systems.
“Our savings from the global alliance with TRATON are on track to yield $500 million in the first five years, with $200 million in annual savings by year five,” said Walter Borst, Navistar’s chief financial officer.
Please click here to view the full press release.