Paccar’s profits rise 16 percent

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The Seattle Times / January 30, 2015

The Bellevue-based truckmaker said 2014 yielded the second best annual profit in the company’s century-long history.

Paccar reported a 16 percent increase in net income for 2014, bringing in the second best annual profit in the company’s century-long history.

“Paccar’s North American customers are benefiting from good economic growth, record freight tonnage, lower fuel prices and the excellent operating efficiency of Kenworth’s and Peterbilt’s industry-leading trucks,” said company CEO Ron Armstrong.

For the year, the company reported a profit of $1.4 billion, or $3.82 a share, up from $1.2 billion, or $3.30 a share, in 2013.

Truck sales brought in $14.6 billion in revenue, up 12 percent from a year ago. Paccar parts generated $3.1 billion, up 9 percent over last year and a record for the business. Total revenue for the company, including financial services, increased almost 11 percent to nearly $19 billion — a record high for the company.

During 2014, the company opened a new distribution center in Montreal, Canada, and began construction of a new 160,000-square-foot distribution center in Renton.

Paccar delivered 142,900 trucks worldwide in 2014 — including its one millionth Kenworth truck. In U.S. and Canada, the company sold 84,800 trucks, up 23 percent from 2013. European sales were down 18 percent to 39,500 trucks.

In a conference call with analysts, Armstrong said the political tensions with Russia have affected demand in that country to some extent. But with freight activity increasing in Europe as a whole, the European market has the potential to improve.

“I think it’s a matter of people getting confident about how the future may look for them,” he said. “Once they gain that confidence, they will be willing to be more aggressive in placing that order.”

The company delivered 3,600 trucks in South America for the year, a 37 percent increase from 2013, due in part to production rising at the Brazil factory that was built in 2013.

Analysts on the call questioned what impact declining oil prices will have on Paccar’s sales in 2015.

Because only about 10 percent of the company’s truck volume is related to supporting the oil industry, principally as water and sand trucks, Paccar does not expect much backlash due to possible reduced oil exploration.

“Our assessment of the impact of the lower oil prices is a positive for the U.S. and U.S. economy,” Armstrong said. “That will create additional consumer spending and consumer demand, which I think will benefit freight volumes.”

For the quarter, Paccar reported a profit of $394.3 million, or $1.11 cents a share, up 18 percent from $334.2 million, or 94 cents a share, for the same period in 2013.

Truck sales brought in the majority of revenue, increasing 13 percent to just under $4 billion. Total revenue for the company during the forth quarter was $5.1 billion, up 11 percent from the same period in 2013.

Paccar is one of several heavy- and medium-duty truck producers under investigation by the European Commission for possible anti-competitive practices in the European Union.

The commission began investigating the companies in January 2011, and in November sent a “statement of objections” to each company involved, informing them of its suspicions of anti-competitive practices.

Paccar is preparing a response, which the commission will review before making any decisions.

Friday the company again said it is unable to predict the outcome of the proceedings or estimate the potential fine that may be incurred.

Paccar shares closed Friday at $60.11, down $3.94 or 6.2 percent. Shares traded between $53.59 and $71.15 in 2014.

More information: http://www.paccar.com/news/current-news/2015/paccar-reports-record-annual-revenues/