Sales, Earnings Improve in 3rd Quarter, Truck, Engine Manufacturers Report

This story appears in the Nov. 1 print edition of Transport Topics.

Three truck manufacturers and engine maker Cummins Inc. all reported improved revenue in the third quarter as the market for new trucks in North America continued to improve.

Volvo AB, Paccar Inc. and Daimler AG all reported higher sales and improved net revenue in the quarter ended Sept. 30. The companies also noted improved business from North American truck buyers.

Engine maker Cummins, based in Columbus, Ind., said sales and revenue increased, even though the company sold fewer heavy-duty truck engines worldwide. Cummins said shipments dropped off in part because of new federal emissions regulations in the United States for 2010 models.

“For the first time — and we have been waiting for that a couple of quarters, as you know — we saw North America with an improving demand in the different categories, but most notably so on long haulage,” Volvo Chief Executive Officer Leif Johansson said Oct. 22 in a conference call with investors.

At Volvo, which sells Volvo and Mack brand trucks and engines in the United States, quarterly operating profit for the global truck division was about $372 million, a swing from an operating loss of about $320 million in the 2009 quarter. Truck revenue climbed 36% to about $5.68 billion. The company does not provide revenue figures for individual sales regions.

So far this year, Volvo said it has delivered 15,512 trucks to North American buyers, a 30% increase from a year ago. North American deliveries for the quarter rose 40% to 5,869 trucks.

Volvo, Gothenburg, Sweden, reports financial results in Swedish kronor.

Including all business lines, Volvo’s quarterly net rose to about $393 million, a reversal of the $400 million loss the vehicle maker reported a year ago. Quarterly sales increased about 41% to approximately $8.71 billion.

At Paccar Inc., maker of Kenworth and Peterbilt trucks in the United States, net income rose to $119.9 million from $13 million a year ago. Quarterly net sales rose 31% to about $2.3 billion, Paccar said.

Quarterly revenue derived from U.S. and Canadian sales rose to about $1.31 billion from about $1.05 billion in 2009, Paccar said.

Daimler AG, the world’s largest truck maker, said on Oct. 28 that “the U.S. market continued its hesitant recovery” in the third quarter.

Truck-segment operating income at Daimler was about $646.6 million in the third quarter, compared with a loss of about $181.6 million a year earlier.

The truck segment’s income in the 2010 quarter included a one-time benefit of about $236.6 million, related to “the adjustment of health-care and pension benefits” at Daimler Trucks North America.

Quarterly truck sales rose to about $8.32 billion from about $6.28 billion a year ago, Daimler said.

Daimler does not break out revenue by geographic region. However, the company said that it sold 20,300 trucks in North America in the third quarter, a 33% increase from 2009.

Meanwhile, Cummins said that its third-quarter operating profit for its engine business rose to $223 million from $61 million a year ago. This was despite a drop in global engine sales, the company said.

Cummins shipped 15,200 heavy-duty truck engines in the third quarter.

The company said that the phase-in of the Environmental Protection Agency’s 2010 emission cuts was a boon for its Emission Solutions business, where sales rose 47%.

With the average North American truck fleet age at a historic high — about seven years — Volvo and Paccar predicted that the domestic market will heat up in 2011 as buyers replace older models.

“Industry retail sales in 2011 are expected to increase, due to the historically high fleet age and general economic growth, to a range of 160,000 to 180,000 units,” said Dan Sobic, Paccar’s executive vice president.

However, that is “below normal replacement demand of approximately 225,000 units,” Sobic added.

“Although the economic recovery in the U.S. is weak, we expect a replacement-driven improvement in demand and that the market for heavy-duty trucks will reach a level above 200,000 vehicles in 2011,” Volvo CEO Johansson stated.

Meanwhile, Navistar Inc. is due to report fourth fiscal quarter and 2010 fiscal year earnings in late December. The company’s fiscal year ends Oct. 31.