Paccar sales surge in the face of NA downturn

BELLEVUE, Wash. — What to do when the North American heavy-duty manufacturing industry is in the midst of a 35 percent downturn? Simple. Boost sales overseas.

Despite the 2007 slowdown on this side of the pond, Paccar, the parent of Peterbilt and Kenworth brand trucks, reported earnings of $365.6 million for the first quarter of 2007; and first quarter net sales and financial services revenues were $3.98 billion, 3 percent higher than the $3.85 billion reported for the comparable period in 2006.

“Paccar’s balanced global diversification has benefited from a strengthened Eurozone economy and steady GDP growth in North America, in combination with the growth of aftermarket parts and financial services,” said Mark C. Pigott, chairman and CEO. ” … Business outside the U.S., which is over 50 percent of the company’s total revenues, is making a major contribution to the excellent performance, and is providing a counter-cyclical balance to slower business in North America.”

The truckmaker has reduced production levels in its U.S. and Canadian facilities to reflect lower industry demand, which has been impacted by higher-cost 2007 emission engines.

“The lower demand and proactive build rate adjustments will have a dampening effect on company financial results until the industry absorbs new vehicles purchased in 2006,” said Pigott.

Paccar sells into 100 countries. Its revenues reflect robust global markets contributing to the company’s profit growth of more than 600 percent in the last decade, added Pigott.

But that doesn’t mean the company isn’t confident of a North American rebound soon enough. It recently announced plans to build a $400 million engine manufacturing and assembly facility in the Southeast U.S.

Construction of the 400,000 sq ft facility will begin this summer and is due to be completed in 2009. It will manufacture 12.9L and 9.2L Paccar-branded engines for use in Kenworth, Peterbilt and DAF vehicles.

The company expects industry Class 8 retail sales to be 190,000 to 220,000 for 2007.