BELLEVUE, Wash. — Despite spiraling truck sales in North America and around the world, Paccar managed to record a net profit in 2008 for the 70th straight year.
In fact, its net income was the fourth highest in the company’s history, it reported last week.But despite the profit earned in 2008, the company said it’s not immune to steadily deteriorating market conditions.
“Paccar’s excellent balance sheet and strong cash flow have enabled ongoing investments in capital projects such as diesel engines, new vehicles and factory productivity improvements. These projects will assist the company in achieving its long-term growth objectives,” said Mark Pigott, chairman and CEO of Paccar. “However, the severe recession is affecting our business in North America and Europe. Our fourth quarter 2008 financial results were negatively impacted by reduced gross margins, lower build rates and temporary plant shutdowns. These challenges are increasing in 2009. Paccar is rigorously reducing operating expenses and capital expenditures to align the business with the slower markets.”
Paccar reported net earnings of US$113.1 million for the fourth quarter of 08, down significantly from the US$261.1 million earned in the same quarter of 07. Net income for the full year was US$1.02 billion, a 17% decline from 2007.
“Class 8 industry retail sales in the U.S. and Canada were 153,000 in 2008 compared to 176,000 in 2007 and reflected the recessionary economy, particularly the slowdown in the housing and automotive sectors,” said Dan Sobic, Paccar executive vice-president. “Industry retail sales in 2009 are expected to be in the range of 130,000-170,000 vehicles, reflecting continued economic weakness. Paccar’s 2008 retail share of the US and Canadian Class 8 market was 26%. Our customers are benefiting from lower fuel prices and improved availability of drivers, even though freight tonnage is comparable to 2000 levels.”
Bill Jackson, Peterbilt general manager, added, “There is some good news longer term about the industry. The average age of the North American industry fleet is the highest in the last 15 years. Truck retail sales are below the five-year average of 235,000 units because of the current recession. In a normal cycle, many truck operators would replace their vehicles in the next 12-24 months to maintain a competitive operating cost structure. The truck industry is generating good parts and service business due to the aging fleet and the industry is poised to rebound when the general economy improves.”
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