Paccar reports a 21% jump in earnings

BELLEVUE, Wash. (Feb. 3) — Buoyed by record sales, truckmaker Paccar Corp. announced a 21% surge in earnings during 1998 on revenues of $7.6 billion.

Net income of $416.8 million US for the year exceeded 1997 earnings of $344.6 million, the company reported. Earnings per share value increased to $5.30 per share in 1998 from $4.41 the year previous.

Consolidated net sales for 1998 were $7.6 billion, up 17% from the $6.5 billion recorded a year ago.

The jump in earnings reflects a record year for truck production — 93,800 vehicles — at Paccar, which builds light-, medium- and heavy-duty trucks under the Kenworth, Peterbilt, DAF, and Foden nameplates.

Paccar’s key performance measures — return on equity and return on sales — increased in 1998. Return on beginning equity climbed to 27.8% in 1998 from the 22.8% achieved in 1997. The company’s 1998 return on sales increased to 5.5% from 4.8% a year ago. Both comparisons exclude the non-recurring gain from the sale of Trico Industries in 1997.

In North America, the company said it would benefit in 1999 from the refurbishment and re-opening of its assembly plant in Ste. Therese, Que., in June (the plant will build class-6/7 trucks) and a new four-year contract with the United Auto Workers at its Nashville, Tenn., factory.

Meanwhile, Paccar chairman Mark Pigott said the company’s acquisition of Britain-based Leyland Trucks “represents an important piece of the strategy to grow our presence in Europe, particularly in the market for 6-15T trucks. We already have made significant progress towards our goal of increasing profitable market share in the European 15T-and-over market as DAF recorded a 10.5% share in that category.

Pigott said the company is making “major strides” consolidating its operations in Europe and taking advantage of synergies among its divisions in terms of product development, purchasing consolidation, and financial services.

This year, Paccar predicts that retail sales for heavy-duty trucks will tail off to 205,000 to 225,000 units versus approximately 250,000 last year. Sales for medium-duty trucks is expected to be 115,000 to 125,000 vehicles. In Europe, heavy-duty retail sales are expected to be between 185,000 and 195,000 trucks compared to 205,000 in 1998, while demand for medium-duty trucks will range from 75,000 to 85,000 units.

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