NEW YORK, NY -- (Marketwire) -- 02/06/13 -- Apart from the disappointing fourth quarter GDP report, recent economic data out of U.S. has been encouraging. The last minute fiscal cliff deal signed at the start of this year has also ended a great of uncertainty. This augurs well for truck manufacturers such as Oshkosh and Navistar International. Last month, the Commerce Department reported that the U.S. economy contracted unexpectedly in the fourth quarter of 2012. The U.S. economy shrank 0.1% in the fourth quarter. However, this was the initial reading on the fourth quarter GDP and the number could be upwardly revised when the final GDP report released.
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In addition, the fourth quarter GDP data was one of the rare disappointing news on the economic front in the last few weeks. On Friday, several reports, including non-farm payrolls data and better-than-expected consumer sentiment data, pointed to continuing recovery in the economy.
The recovery has been the strongest in the housing market, the collapse of which had led to the financial crisis of 2009 and the subsequent recession. On Friday, a report from the Commerce Department showed that construction spending rose 0.9% in December to an $885 billion annual rate. The strong recovery in the housing market is a good sign for Oshkosh, which is exposed to construction activity through its JLG unit.
While the outlook for U.S. economy has continued to improve, the looming sequester is a concern for both Oshkosh and Navistar. If the sequester goes into effect on March 1, then it will lead to cuts in military spending. This will hurt Oshkosh's and Navistar's military business. Lawmakers now have less than a month to reach a deal on reducing U.S. deficit and avert the looming sequester.
Late last month, Oshkosh reported its financial results for the first quarter of fiscal 2013. The Oshkosh, Wisconsin-based company reported net income of $46.2 million, or $0.51 per share for the first quarter of fiscal 2013, compared to $38.9 million, or $0.43 per share reported for the same period in the previous year. Adjusted net income for the quarter was $55.1 million, or $0.60 per share, compared to $34.6 million, or $0.39 per share reported for the same period in the previous year.
Charlie Szews, CEO of Oshkosh, noted that each of the company's non-defense segments improved its operating income margins compared to the prior year quarter, favorably positioning the company to deliver on its long-range goals. Following the strong results, Oshkosh also raised its outlook for fiscal 2013 adjusted earnings to $2.80-$3.05 per share.
Back in December, Navistar had reported a pre-tax loss of $566 million due to adjustments to pre-existing warranties and the charges related to the cost-reduction actions.
Navistar CEO Lewis B. Campbell, said at the time of the release of fourth quarter results in December that the company continues to make significant progress on its turnaround and the complexity of fourth quarter results is reflective of the actions necessary during the time of transition.
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