Navistar (NAV) - Get Report swung to a profit in the second quarter, but the truck maker warned third-quarter earnings would come in below analysts' estimates.

The company said Thursday it earned $41 million, or 54 cents a share, in the quarter ended April 30, compared with a loss of $14 million, or 21 cents a share, a year earlier.

The latest results included a loss of 6 cents a share from unfavorable foreign exchange -- primarily the Canadian dollar. It was unclear if this impact was incorporated into analysts' estimates of 59 cents a share, however the company previously had indicated it expected to earn 45 cents to 55 cents a share.

Revenue rose to $2.3 billion -- topping the analyst consensus of $2.06 billion -- from $1.9 billion a year earlier.

Navistar Chief Executive Daniel C. Ustian, said the recent economic improvement and upsurge in new truck orders is consistent with what the company said in February when it raised its industry retail sales volume 8%. He reaffirmed the outlook that a total of 328,500 Class 6-8 trucks and school buses will be sold in the U.S and Canada in the fiscal year ending October 31.

According to Ustian, the return to profitability in the second quarter was achieved in a challenging environment as the company continues along the path of reducing vehicle costs by $1,600 a truck in 2004.

Second quarter gross margins were 12.9%, the same as in the second quarter a year ago. Improvements in performance and product startups offset steel price increases, foreign exchange and expenses associated with component supply issues. Additionally, second quarter results included an accrual for profit sharing and incentive compensation for the first time since the third quarter of 2000.

"There were some constraints in the supply base as we began to increase production, which contributed to the company finishing the quarter with approximately 1,000 trucks in inventory," Ustian said. "Additionally, we were impacted by supplier surcharges to cover the rising cost of steel. We now have instituted our own steel surcharge; however, we are still sharing the pain of increased steel costs with our suppliers and our customers."

For the third quarter, Navistar expects to earn 60 cents to 70 cents a share, well below analysts' expectations of 99 cents a share.