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Paccar Inc. reported higher third-quarter net income and revenue amid gains in sales of trucks and parts.
For the period ended Sept. 30, Paccar posted net income of $607.9 million, or $1.75 per diluted share, on revenue of $6.37 billion compared with $545.3 million, or $1.55, on revenue of $5.76 billion a year earlier.
“Paccar achieved a strong 14.9% truck, parts and other gross margin in the third quarter and year-to-date, benefiting from good pricing, production efficiency and rigorous cost controls. We anticipate that 2020 will be another good year with a normal replacement truck market and strong demand for Paccar’s premium products,” Paccar CEO Preston Feight said in a release.
The Bellevue, Wash.-based company forecast Class 8 retail sales for the U.S. and Canada will range from 310,000 to 320,000 vehicles in 2019, making it the second-highest market in history — trailing only 2006, whose U.S. Class 8 retail sales alone totaled 284,008, according to WardsAuto.com.
Next year, retail sales could fall by as much as 90,000 trucks. But expected sales of 230,000 to 260,000 would form “a solid replacement market,” Executive Vice President Gary Moore said.
“I think one of the great strengths of Paccar is that we are always looking at operational efficiency gains, not just in one year but over the course of time. We’re always thinking about cost control. So as we head into markets like the normalized market we’re facing, we’ve already been aggressively thinking about cost control and I think that’s what enabled us to deliver the solid gross margins we had this quarter and even the quarterly gross margins we predict for next quarter in 14% to 14.5%,” Feight said during an earnings call with investment analysts.
Paccar’s North American medium- and heavy-duty truck brands include Kenworth Truck Co. and Peterbilt Motors Co. (Kenworth also is sold in South America). Its European-produced brand is DAF.
“Paccar Parts’ outstanding financial results have been driven by investments in new parts distribution centers, innovative programs such as national fleet services, e-commerce and a growing population of Paccar MX engines. Paccar Parts’ new 250,000-square-foot PDC in Las Vegas and 160,000-square-foot PDC in Ponta Grossa, Brazil, will open in 2020,” said David Danforth, Paccar Parts general manager.
The parts unit posted pretax profit of $207.4 million, 10% higher than the $188.5 million earned in the third quarter of 2018. Revenue was $1 billion, or 4% higher than the $960.1 million a year earlier.
At the same time, since 2013, DAF, Kenworth and Peterbilt dealers have opened nearly 200 TRP retail stores, which provide aftermarket products and services to owners of all makes of light-, medium- and heavy-duty trucks, trailers, buses and engines. TRP stores are located close to customers in order to provide fast delivery, parts selection and technical expertise for all brands of trucks. Fifty percent of the customers at TRP stores are new to Paccar, the company reported. The retail stores are located in Europe, North America, South America, Australia, Asia and Africa.
Feight said Paccar would add dealer locations in North America next year.
Its financing unit achieved quarterly revenue of $362.8 million compared with $339.9 million in the year-ago quarter. It has a portfolio of 205,000 trucks and trailers, with record total assets of $15.61 billion. PacLease, a full-service truck leasing company in North America and Europe, with a fleet of 39,000 vehicles, is included in this segment.
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