Paccar Shines in First Quarter, Hints At Acquisitions
April 26, 2000
Paccar did well in the first quarter, posting record sales and earnings, but is looking at possible acquisitions to solidify its position in the world truck market.
The company reported first quarter 2000 net income of $154.9 million on sales of $2.2 billion, compared to net income for first quarter 1999 of $119.5 million on sales of $2.1 billion. Return on sales for the first quarter was 7%.
"These excellent financial results reflect the benefits of Paccar's broad geographic coverage, strong financial services and aftermarket parts business, Six Sigma initiatives and productivity enhancements," said chairman and CEO Mark Pigott.
"Truck sales are strong in Europe, and DAF is increasing production by 15% to met customer demand," he noted. The North American truck market is lower due to higher fuel prices and increased used-truck inventory, which is dampening new truck sales."
Pigott told the Financial Times that consolidation in the truck industry meant that Paccar was also evaluating acquisition opportunities. While he acknowledged a "sense of urgency," he said that the company had "nothing specific to report at this time."
Instead, he suggested that as Renault and Volvo integrated their truck operations, other manufacturers could see short-term marketing openings. "Whenever we see major change in the industry, we see it as an opportunity — any acquisition brings a degree of turmoil," he told the Times.
The Seattle-based group also held out the possibility of a record year for the industry in Europe during 2000, but admitted that North American production could be down by 20% to 25% from the strong levels seen in 1999.
The company recently increased Class 6/7 conventional truck production at its Ste. Therese, Quebec, plant. The facility also builds Paccar's two new medium-duty COEs, the Kenworth K300 and the Peterbilt 270.
"Paccar is investing in new medium-duty trucks and powertrains to significantly increase its share of the Class 4-7 marketplace," said president David Hovind. "We plan to produce over 15,000 medium duty trucks globally this year."