"Paccar's results reflect the impact of a slower economy on freight shipments and truck purchases worldwide," said Mark C. Pigott, chairman and chief executive officer, who noted that despite the global economic slowdown, Paccar's balance sheet and positive cash flow have enabled ongoing investments to improve efficiency and develop innovative products such as new diesel engines and hybrid vehicles
"The difficult recession continues to affect our business in North America and Europe as truck markets remain weak," Pigott said. "The first quarter 2009 financial results were negatively impacted by lower build rates, temporary plant shutdowns and reduced gross margins. These challenging market conditions are continuing as we enter the second quarter of 2009. Paccar has rigorously reduced operating expenses and capital expenditures to align its business with the current market."
Paccar earned $26.3 million (7 cents per diluted share) for the first quarter of 2009 compared to $292.3 million (79 cents per diluted share) earned in the first quarter last year. First quarter net sales and financial services revenues were $1.99 billion compared to $3.94 billion reported for the first quarter of 2008.
Andrew Obin of Merrill Lynch Machinery Research noted that 7 cents per share was above his company's forecast of 4 cents and the consensus of 5 cents, thanks largely to build rate reductions and temporary plant shutdowns in the first quarter. However, Obin said, "We think persisting bad news from Europe will likely continue to negatively impact the company."
"Class 8 industry retail sales in the U.S. and Canada are expected to be in the range of 100,000-130,000 vehicles in 2009, reflecting continued economic weakness, specifically in lower housing starts and auto production," said Dan Sobic, executive vice president. "The good news is that even though freight tonnage is below year-ago levels, it has improved slightly in the last two months. Additionally, our customers' profitability is benefiting from lower fuel prices and good availability of drivers.
"Truck retail sales are below the five-year average of 235,000 units resulting in the highest average age of the North American fleet in 15 years because of low replacement levels. The truck industry is generating steady parts and service business due to the aging fleet and truck sales are poised to rebound when economic conditions improve," added Sobic.