Earnings for truck makers moved higher in the first quarter of the year, with three on Tuesday showing big improvements from the same time in 2016.
Volvo AB's first quarter profit increased 25% from a year earlier, totaling 4.73 billion Swedish kronor, or $533.7 million, according to MarketWatch, beating analysts' expectations of 3.56 billion kronor.
Sales during the period rose 8% to 77.37 billion kronor, compared with 71.71 kronor billion a year earlier The better numbers were driven by increased orders of both trucks and construction equipment.
“After the downwards correction in the long haulage segment in 2016, the North American [truck] market seems to be bottoming out. We see positive signs of increased order activity,” said Martin Lundstedt, president and CEO.
He noted that the truck market in Europe remained strong in the first quarter of the year and demand there for heavy duty trucks is expected to be about the same as it was in 2016.
In North America, Lundstedt said dealer inventories of new trucks are at healthy levels, however inventories for used long-haul trucks remain elevated.
“This continues to dampen demand for new trucks in this segment despite indications of an improving freight environment. Demand in the refuse and construction segments remains good. Retail sales for the industry are forecasted to be lower 2017 compared to 2016,” he said.
North American truck deliveries were down 34% compared to a strong first quarter 2016. Both Volvo Trucks and Mack gained market shares, with Volvo Trucks reaching 9.4% and Mack hitting 8.9%. The order intake increase of 27% was driven by both Volvo Trucks and Mack reflecting higher activity within the construction segment and a somewhat improved freight environment combined with low dealer inventories, according to Volvo
Paccar Earnings Rebound
Back in the U.S., the parent to Peterbilt and Kenworth reported a big turnaround. Paccar Inc. had net income of $310.3 million compared to a net loss of $594.6 million a year earlier. The performance a year earlier was due to more than $900 million the company had to pay over claims of price fixing in Europe that involved it and other truck manufacturers.
Earnings per share in the first quarter of 2017 were 88 cents, 1 cent better than Wall Street expectations. Despite this turnaround, revenue declined 1.7% to $3.94 billion.
“Paccar benefited from increasing truck production in North America and Europe, as well as record quarterly Paccar Parts pretax profits,” said Ron Armstrong, CEO.
U.S. and Canada Class 8 truck industry orders were 40% higher in the first quarter of 2017 compared to the same period last year, according to Darrin Siver, Paccar senior vice president, who said this reflects a good economy and steady freight demand.
“Peterbilt and Kenworth achieved 32% share of U.S. and Canada Class 8 truck industry orders in the first quarter this year,” he said. “Class 8 truck industry retail sales for the U.S. and Canada in 2017 are expected to be in a range of 190,000 to 220,000 vehicles.”
Paccar Parts achieved record quarterly pretax income of $151.7 million in the first quarter of 2017, which was 13% higher than the $134.6 million earned in the same period last year. It generated revenues of $786.7 million in the first quarter of 2017, 9% higher than the $719.5 million reported in the same period last year.
Daimler Pre-Tax Profit Nearly Doubles
Not to be outdone, the parent company to the Freightliner, Western Star and Mercedes-Benz brands reported preliminary numbers Tuesday, a day before it publishes full first quarter numbers.
Daimler AG earnings before interest and taxes (EBIT) jumped 87.1% in the first quarter from a year earlier, totaling $4.01 billion euros, or $4.25 billion, according to Reuters, due to better car sales and one-time gains.
The German company said that EBIT for Mercedes-Benz cars totaled 2.234 billion euros, up from 1.395 billion a year earlier. Daimler Truck EBIT was 668 million euros compared to 516 million euros in the first quarter of 2016.
According to the Financial Times, Daimler was forced to publish strong first-quarter results two weeks early because they were “significantly above market expectations."