"In these turbulent times, Paccar is experiencing lower truck demand in Europe, Mexico and Australia, and continued softness in the U.S. and Canada, which will reduce financial results in the fourth quarter of 2008 and into 2009," said Mark C. Pigott, chairman and CEO.
"There are over 1.5 million Paccar commercial vehicles in service worldwide, the largest population in our history," Pigott said. "These vehicles generate steady aftermarket revenues and many of them also contribute financial services income, which partially offset reduced truck build rates worldwide.
"As in previous cyclical downturns, the company is rigorously aligning operating costs with market conditions while selectively investing in capital projects and new products that will generate excellent customer benefits."
Paccar earned $299 million ($0.82 per diluted share) for the third quarter of 2008 compared to $302.3 million ($0.81 per diluted share) earned in the third quarter last year. Third quarter net sales and financial services revenues were $4 billion. Net sales and financial services revenues for the first nine months of 2008 were $12.06 billion. Paccar reported nine-month net income of $904.8 million ($2.47 per diluted share), compared to $966.2 million ($2.58 per diluted share) in 2007.
In Europe, noted Aad Goudriaan, DAF Trucks president, truck sales in Western and Central Europe above 15 tonnes are expected to be comparable this year to the 340,000 units sold in 2007. "After robust growth for a number of years, the European economy and truck markets are now slowing," he said. "As a result of the recent slowdown in customer demand, DAF will reduce its build rate during October and anticipates the 2009 commercial vehicle market will reflect the slower economy. European industry truck sales in 2009 are difficult to predict due to economic uncertainty, but they could be at a level of 260,000-300,000 units."
In the U.S and Canada, declining housing starts and auto production have impacted Class 8 truck sales throughout 2008, said Dan Sobic, Paccar executive vice president. "Industry retail sales are expected to be approximately 150,000 vehicles this year. Industry retail sales are projected to improve slightly in the second half of 2009 and are expected to be in the range of 170,000-210,000 as fleets replace vehicles after several years of lower purchases."
Export sales are a bright spot. Paccar International delivers Kenworth, Peterbilt and DAF vehicles to customers in more than 100 countries. "Despite the current global economic environment, Paccar is experiencing good demand from Latin America and Middle East customers, particularly for Kenworth off-highway and oil well servicing vehicles," said Claire Hargrave, Paccar International general manager.
Financial Highlights - Third Quarter 2008
* Consolidated sales and revenues of $4 billion.
* Net income of $299.0 million.
* After-tax return on revenues of 7.5 percent.
* Truck and other gross margin of 15.4 percent.
* Shareholders' equity of $5.34 billion.
Financial Highlights - First Nine Months 2008
* Consolidated sales and revenues of $12.06 billion.
* Net income of $904.8 million.
* Cash provided by operations of $1.01 billion.
* Financial Services pretax income of $171.5 million on assets of $10.7 billion.
* An annualized after-tax return on beginning equity of 24.1 percent.
* Record capital investments of $352.3 million.
* Record research and development of $261.7 million.
* Truck and Other gross margin of 15.3 percent.