Paccar Announces 70 Consecutive Years of Net Profit

January 30, 2009

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Paccar announced it earned its fourth highest annual net income in its 103-year history in 2008, making for 70 consecutive years of net profit.

"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," said Mark C. Pigott, chairman and chief executive officer. "These projects will assist the company in achieving its long-term growth objectives."

However, Pigott noted, fourth quarter 2008 financial results were negatively impacted by reduced gross margins, lower build rates and temporary plant shutdowns, and these challenges are increasing in 2009. "Paccar is rigorously reducing operating expenses and capital expenditures to align the business with the slower markets."

Paccar net earnings were $113.1 million for the fourth quarter of 2008 compared to the $261.1 million earned in the fourth quarter of 2007. Fourth quarter net sales and financial service revenues were $2.92 billion compared to $3.76 billion reported for the comparable period in 2007. During the quarter, the company generated $345.4 million in operating cash flow.

For the full-year 2008, consolidated net sales and financial service revenues were $14.97 billion versus $15.22 billion in 2007. Net income earned in 2008 of $1.02 billion was 17 percent lower than the $1.23 billion earned during 2007.

One of the bright spots in 2008 were DAF sales. "Industry sales above 15 tonnes in Western and Central Europe were 330,000 units in 2008, the second best year ever," said Aad Goudriaan, DAF president. "DAF achieved an excellent market share in the above 15 tonne market of 14.2 percent and has a medium-term goal of 20 percent market share. DAF is the European leader in premium-quality products and achieved record sales and production in 2008, delivering over 64,000 vehicles."

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, noted Dan Sobic, Paccar executive vice president. Industry retail sales in 2009 are expected to be in the range of 130,000-170,000 vehicles, he said, reflecting continued economic weakness. Paccar's 2008 retail share of the U.S. and Canadian Class 8 market was 26 percent.

"There is some good news longer term about the industry," sad Bill Jackson, Peterbilt general manager. "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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