Truck and engine maker Paccar Inc. (NASDAQ: PCAR) on Tuesday reported a loss for the first three months of the year, due to a European price fixing investigation. Lower numbers also were reported by Allison Transmission Holdings Inc. (NYSE: ALSN) the day before.
The Washington-state parent to Kenworth, Peterbilt and DAF reported a $594.6 million loss, or $1.69 per share, compared to a profit a year ago of $378.4 million, or $1.06 per share.
Adjusted net income totaled $348 million, excluding a $942.6 million non-recurring charge for the European Commission investigation. This compares with adjusted net income of $378 million a year ago. The results of adjusted net earnings of 99 cents per share beat expectations of analysts surveyed by Zacks Investment Research by 3 cents. In January, the 110-year-old Paccar reported its 77th straight year of net income.
According to the Seattle Times, Paccar said last month it would take the nearly $1 billion charge against its earnings as it prepares for a European Union antitrust ruling on truck-industry pricing. The EU’s original investigation started in January 2011, when it raised concerns that certain truck-makers may have agreed to or coordinated pricing in Europe, creating restrictive business practices. The investigation was disclosed by EU regulators in late 2014 and affects other makers as well. Daimler, for instance, set aside some $748 million in late 2014, after examining documents on which the European Commission is basing its anti-trust case.
"Despite the one-time charge, Paccar reported good revenues and operating income for the first quarter of 2016,” said Ron Armstrong, CEO. “Paccar benefitted from a favorable truck market in North America and record DAF market share of 16.6% year-to-date in Europe. Paccar generated increased truck and parts segment margins, and good financial services results worldwide."
First quarter 2016 net sales and financial services revenues were $4.3 billion compared to $4.83 billion for the first quarter of 2015. When the numbers are broken down, truck sales fell from nearly $3.8 billion in the first quarter of last year to a little below $3.3 billion in the most recent quarter. Parts revenue dropped from $752.7 million to $719.5 million, but financial services increased by nearly $5 million to $289.4 million.
Paccar new truck deliveries in the U.S. and Canada for the quarter moved lower to 18,500 units compared to 24,400 a year earlier. European deliveries increased to 13,500 from 10,100 in the first quarter of 2015.
Allison Profit Shrinks 29%
Meanwhile, lower demand in the global off-highway market and other areas cause a drop in sales and income for Allison Transmission Holdings Inc. (NYSE: ALSN), global manufacturer of commercial automatic transmissions. Net sales totaled $462 million, an 8% drop from the same period in 2015. The Indiana-based company reported net income for the first quarter fell 29.4% to $48.3 million, or from 38 cents per share to 28 cents per share.
"Allison's first quarter 2016 results are within the full year guidance ranges we provided to the market on Feb. 8,” said Lawrence E. Dewey, chairman and CEO. “The year-over-year reductions in the global off-highway and service parts, support equipment and other end markets net sales are consistent with the previously contemplated impact of low energy and commodity prices. Allison demonstrated solid operating margins and free cash flow while executing its prudent and well-defined approach to capital structure and allocation.”
North America on-highway end market net sales were down 4% from the same period in 2015,. Outside North America, on-highway end market net sales were up 23% from the same period in 2015, mainly driven by higher demand in Europe and Japan, and up 8% from the previous quarter, due largely to higher demand in Japan.
Allison affirmed its full year 2016 guidance ranges released in February with net sales expected to be 6.5% to 9.5% lower compared to a year earlier. The company didn’t provide specific second quarter guidance.