Truck prebuy pushing profits

BELLEVUE, Wash. — Paccar overcame the worst truck market in modern history to reach its 71st consecutive year of net profit, but revenue in 2009 was still a sliver of the 2008 total.

The company announced improved fourth quarter revenue and income from the third quarter, from $46.1 million, compared to earnings of $13 million in the third quarter, and $113.1 million in the fourth quarter of 2008.

The sharp spike reflected a late pre-buy trend in North America.

Consolidated sales and revenue was $2.24 billion for the three-month period, down from about $2.9 billion in the year-ago quarter. The company’s aftermarket parts segment saw revenues of $497.6 million.

For the full year 2009, the company’s net income was $111.9 million, compared to about $1 billion for 2008.

"Many of the world’s economies are still in the middle of a challenging recession," said Mark Pigott, chairman and CEO of Paccar. "Consumers are increasing their savings and reducing spending, which is healthy for economies in the long run; however, it has resulted in less freight year-on-year and lower demand for commercial vehicles. Paccar is one of the few companies in the sector to deliver net income every year in the last decade."

In 2009, Paccar delivered 61,000 vehicles worldwide through its Kenworth, Peterbilt and DAF nameplates. Paccar grew its Kenworth and Peterbilt dealer network to a record 551 locations.

The company’s Kenworth and Peterbilt trucks had a combined 25.1 percent retail share of the U.S. and Canadian Class 8 market and 15.3 percent retail share of the Class 6-7 market in 2009.

"The fourth quarter 2009 industry truck sales benefited from a modest pre-buy due to the transition to 2010 engines," said Dan Sobic, executive vice president of Paccar. "Industry truck retail sales in 2010 are expected to improve slightly due to the aging of the fleet and some general economic growth. The U.S. and Canadian Class 8 retail sales in 2010 are projected to be in the range of 110,000-140,000 units."

The company plans to increase capital investments in 2010, with targets for capital expenditures of $175-$200 million and research and development expenses of $225-$250 million for new products and enhancing operating efficiency.

Other 2009 achievements include construction of Paccar’s new engine production facility in Columbus, Miss. Paccar engines, including the DAF-based MX, will be available in Peterbilt and Kenworth trucks in the summer of 2010.

Meanwhile, Cummins reports similar results, reporting that a profitable fourth quarter led to earnings soaring on increased sales and margins.

The engine maker reported a profit of $270 million, up from $43 million, or 22 cents a share, a year earlier, which included $37 million of restructuring costs.

Results were driven by continued strength in China, India and Brazil as well as "a significant increase for on-highway truck engines and components" in North America because of new emissions standards that took effect at the beginning of this year.

"We have worked hard to position Cummins to emerge from the current downturn an even stronger company," Chairman and Chief Executive Tim Solso said. "The company is in the best financial condition in its history."