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PACCAR reports record-setting revenue and profits in first quarter

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PACCAR has begun work on a 250,000 square-foot parts distribution center in Las Vegas, taking advantage of good times to reinvest in itself. (Courtesy: PACCAR)

Bellevue, Wash. — That economic slowdown everyone keeps predicting is coming? It sure hasn’t arrived yet at PACCAR Inc. The company, which includes the Kenworth and Peterbilt nameplates, announced Tuesday record revenues and net profits for the first quarter of 2019.

“I am very proud of our 28,000 employees who have delivered industry-leading products and services to our customers,” PACCAR CEO Ron Armstrong said in a released statement. “PACCAR delivered a record quarterly number of trucks, driven by Kenworth, Peterbilt and DAF’s (PACCAR’s European nameplate) strong market share and robust global truck demand. PACCAR Parts achieved record quarterly revenues and pretax profits.

Armstrong said much of PACCAR’s good fortune can be attributed to “continued economic and freight growth in North and South America and Europe.”

“We expect 2019 to be another excellent year for PACCAR,” Armstrong said. “Kenworth and Peterbilt’s 2019 build schedules are substantially full, DAF is increasing market share in the European market and the South American above 16-ton truck market is expected to increase approximately 25% in 2019 compared to last year.”

First quarter 2019 net sales and financial services revenues were a record $6.49 billion, 15% higher than the $5.65 billion earned in the first quarter of 2018. PACCAR achieved net income of $629.0 million in the first quarter of this year, another record and 23% higher than the $512.1 million earned in the same period last year.

“First quarter 2019 U.S. and Canada Class 8 truck industry retail sales increased 23% compared to the same period last year,” said Gary Moore, PACCAR executive vice president. At the same time, the company set a new high with 51,000 vehicle deliveries worldwide.

“The strong U.S. and Canada Class 8 truck market and backlog reflect the growing economy and record freight demand,” Moore said. “Class 8 truck industry retail sales for the U.S. and Canada are projected to be in a range of 295,000-315,000 vehicles in 2019.”

DAF’s European above-16-ton truck registrations increased 10% in the first quarter of 2019 compared to the same period last year. “DAF achieved a record 17.1% market share in the European above 16-ton segment in the first quarter this year,” said Harry Wolters, DAF president. “We estimate that European truck industry registrations in the above 16-ton market in 2019 will be in a range of 290,000-320,000 trucks.

In Brazil, the above 16-ton truck market is projected to rebound by approximately 30% to 65,000-75,000 vehicles in 2019, compared to 53,000 vehicles last year. “DAF Brazil is increasing its market share in a growing Brazilian truck market,” said Carlos Ayala, DAF Brazil president.

PACCAR Parts also had a record first quarter, with a pretax income of $207.6 million in the first quarter of 2019, which is 8% higher than the $191.8 million earned in the same period last year. PACCAR Parts achieved revenues of $1 billion in the first quarter of 2019, which is 7% higher than the $939.9 million reported in the same period last year.

“PACCAR Parts has achieved 8% average annual sales growth over the last 15 years,” said David Danforth, PACCAR vice president and PACCAR Parts general manager. “PACCAR Parts’ outstanding growth has been driven by investments in PDCs (parts distribution centers), increased dealer locations including TRP Stores, expanded PACCAR-branded and TRP product lines, industry-leading fleet services and e-commerce programs, and a growing number of PACCAR trucks and engines in operation.

PACCAR Parts is constructing a new 160,000 square-foot PDC in Ponta Grossa, Brazil, and begun construction of a 250,000 square-foot PDC in Las Vegas. Both are scheduled to open in 2020.

PACCAR’s excellent long-term profits, strong balance sheet, and consistent focus on quality, technology and productivity have enabled the company to invest $6.2 billion in new facilities, innovative products and new technologies during the past decade.

“In 2019, capital expenditures of $625-$675 million and research and development expenses of $320-$340 million are targeted for new truck models, integrated powertrains including electric, hybrid and hydrogen fuel cell, advanced driver assistance systems, truck connectivity, and enhanced manufacturing and parts distribution facilities,” noted George West, PACCAR vice president.

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ATA For-Hire Truck Tonnage Index surges 7.4% in April

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Compared with April 2018, the SA index increased 7.7%, the largest year-over-year gain since July. (The Trucker file photo)

ARLINGTON, Va. — American Trucking Associations’ advanced seasonally adjusted (SA) For-Hire Truck Tonnage Index surged 7.4% in April after decreasing 2% in March. In April, the index equaled 121.8 (2015=100) compared with 113.4 in March.

“The surge in truck tonnage in April is obviously good for trucking, but it is important to examine it in the context of the broader economy,” said ATA Chief Economist Bob Costello. “February and March were particularly weak months, as evidenced by the 3.5% dip in tonnage due to weather and other factors, so some of the gain was a catch-up effect. In addition, the Easter holiday was later than usual, likely pushing freight that would ordinarily be moved in March into April.

“I do not think the fundamentals underlying truck tonnage are as strong as April’s figure would indicate, but this may signal that any fears of a looming freight recession may have been overblown,” he said.

March’s reading was revised up compared with our April press release.

Compared with April 2018, the SA index increased 7.7%, the largest year-over-year gain since July.

The not seasonally adjusted index, which represents the change in tonnage actually hauled by the fleets before any seasonal adjustment, equaled 117.7 in April, 1% above March level (116.6). In calculating the index, 100 represents 2015.

Trucking serves as a barometer of the U.S. economy, representing 70.2% of tonnage carried by all modes of domestic freight transportation, including manufactured and retail goods. Trucks hauled 10.77 billion tons of freight in 2017. Motor carriers collected $700.1 billion, or 79.3% of total revenue earned by all transport modes.

ATA calculates the tonnage index based on surveys from its membership and has been doing so since the 1970s. This is a preliminary figure and subject to change in the final report issued around the 5th day of each month. The report includes month-to-month and year-over-year results, relevant economic comparisons, and key financial indicators.

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ACT says trailer order volume soft in second straight month

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This chart compares trailer order volume for three years. (Courtesy: ACT RESEARCH)

COLUMBUS, Ind. — ACT Research’s preliminary estimate for April 2019 net trailer orders is 14,500 units.

Final volume will be available later this month. ACT’s methodology allows the company to generate a preliminary estimate of the market that should be within +/- 3% of the final order tally.

“Order volume was soft in April for the second straight month. Several factors appear to be in play. OEMs continue to be reticent to fully open 2020 orderboards. This is evident in our measurement of the extent of the industry’s backlog, which has remained in the November or December timeframe throughout the first four months of 2019,” said Frank Maly, ACT’s director of CV transportation analysis and research. “While we hear comments of some fleets anxiously awaiting the chance to snap up 2020 build slots, some also appear to be evaluating their existing commitments. Cancellations in April were the highest since August 2016 on both a unit and percent of backlog basis, and have remained elevated since December. That resulted in an interesting dichotomy in April orders; while new orders were actually up versus March, cancellations were significant enough to pull the net order number into the red month-over-month.”

Maly said while down slightly from March, production continues at a brisk pace, although material/component availability and staffing continue to challenge OEMs. Seasonal patterns actually called for a slight increase for April production, so that small sequential decline likely confirms the impact of the aforementioned headwinds.

“Additionally, our discussions indicate that red-tagged units continue to challenge OEM production efficiency,” he said.

ACT Research is a publisher of commercial vehicle truck, trailer, and bus industry data, market analysis and forecasting services for the North American and China markets.

ACT’s analytical services are used by all major North American truck and trailer manufacturers and their suppliers, as well as banking and investment companies.

More information can be found at www.actresearch.net.

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Price of diesel inches up three-tenths of a penny

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Overall, the price for the week ending was down 11.4 cents a gallon lower than last year.

WASHINGTON — The average on-highway price of a gallon of diesel increased three-tenths of one cent to $3.163 for the week ending May 20, according to the Energy Information Administration of the Department of Energy.

The increase was precipitated by a 1.1-cent increase in the Rocky Mountain states (Colorado, Utah, Wyoming, Idaho and Montana) and a 1-center increase in the Central Atlantic states (New York, New Jersey, Delaware, Pennsylvania and Maryland).

The largest decrease was five-tenths of a penny in the Lower Atlantic states (Florida, Georgia, South Carolina, North Carolina, Virginia and West Virginia).

Two regions remained the same as last week.

Overall, the price is down 11.4 cents a gallon lower than last year.

For a complete list of prices by region for the past three weeks, click here.

 

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