Oshkosh Corp. announced that the economic slowdown and the rising costs for raw materials are taking a toll on the company, and it now expects a third-quarter loss of $1.22 to $1.32 per share. The manufacturer of specialty vehicles and vehicle bodies had previously projected third-quarter earnings per share of $1.40 to $1.50. The expected loss relates to a non-cash charge for the impairment of goodwill to be recorded in connection with the company’s European refuse collection vehicle manufacturer, the Geesink Norba Group.
The impact of the impairment charge on third fiscal quarter earnings is estimated to be approximately $175 million, or $2.32 per share. "Lower than expected sales in both North America and Europe driven by softness in non-residential construction and general economic weakness, and rising raw material and fuel costs, have caused us to reduce our outlook for the third quarter and full fiscal year 2008," said Robert Bohn, Oshkosh chairman and chief executive officer. "During the quarter, we also lowered our outlook for Geesink due to a slower and more difficult than expected return to profitability, coupled with expectations of a weaker European economy and higher raw materials costs. This revised outlook has caused us to believe that the value of Geesink no longer supports the goodwill recorded for this business, resulting in the impairment charge we are announcing today."