Paccar Earnings Take a Dive

July 28, 2009

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Paccar's second quarter earnings plummeted 91.5 percent to $26.5 million, or 7 cents a share, down from $313.5 million, or 86 cents a share, for the year-ago quarter.

"These results reflect the impact of a recessionary economy on freight shipments and truck purchases worldwide," said Mark Pigott, chairman and CEO of the company. "The recession continues to affect our business in North America and Europe as truck markets remain weak. Second quarter 2009 financial results were negatively impacted by lower gross margins, temporary plant shutdowns and reduced build rates. The challenging market conditions are continuing as we enter the second half of 2009."

In addition, Paccar's net sales and financial services revenues were $1.85 billion, a 55 percent decrease from $4.11 billion in sales in the second quarter of 2008.

The company's outlook for truck sales in the U.S. and Canada does not look good for the rest of 2009, but Paccar expects a slight uptick next year.

"Class 8 industry retail sales in the U.S. and Canada are expected to be in the range of 100,000-110,000 vehicles in 2009, reflecting continued economic weakness, specifically in lower housing starts and auto production," said Dan Sobic, Paccar executive vice president. "National trucking companies are recognizing the benefits of purchasing new trucks this year as their current vehicles' maintenance costs increase due to the aging of their fleets. Industry retail sales in 2010 are expected to improve slightly and be in a range of 110,000-140,000 units."

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