By Bob Tita
Paccar Inc. reported a 38% increase in first-quarter profit and
said it expects sales of commercial trucks in the U.S. and Canada
to remain at the highest level in nearly a decade.
Paccar, the maker of Kenworth and Peterbilt brands of trucks and
the second-largest seller of the heavy-duty trucks in North America
behind Daimler AG's Freightliner unit, easily topped analysts'
first-quarter profit and revenue expectations. The company raised
its industrywide sales outlook for the year, countering truck
industry forecasters and analysts who have grown increasingly
cautious recently about rising sales growth estimates, saying the
truck market may be at a peak.
"We will see a reasonably good demand for trucks in the
foreseeable future," said Paccar CEO Ron Armstrong during a
conference call Tuesday with analysts. "As long as the economy
continues at a good growth pace, there will be the need for the
movement of goods. Freight numbers continue to be at or near record
levels."
The company now expects industrywide retail sales of heavy-duty
trucks in the U.S. and Canada this year to be in a range of 260,000
to 290,000 vehicles, up from its January forecast of 250,000 to
280,000 trucks. In 2014, 250,000 trucks weighing above 33,000
pounds were sold in the U.S. and Canada, the company said.
"The increase to industry forecasts was somewhat unexpected
given the general, overall market sentiment and the conservative
nature of management," said Stephen Volkmann, an analyst with
Jefferies.
After years of sluggish, fitful demand for trucks that followed
a long and steep sales slump, truck sales have been running at the
highest volumes since 2006. Industry analysts have been focused on
whether the elevated demand stems from trucking companies expanding
their fleets, or simply replacing older, high-mileage vehicles with
new models providing better fuel economy.
Mr. Armstrong said he's convinced that some of the increased
demand is the result of fleet expansions to accommodate rising
freight volumes that have been aided by lower diesel fuel prices.
The fleet utilization rate in the trucking industry is now greater
than 90%. Paccar said its first-quarter truck deliveries in the
U.S. and Canada rose 31% from a year earlier.
Paccar said unfavorable currency-exchange rates trimmed
first-quarter revenue by about $281 million. But the company said
it benefited from a weaker euro against the U.S. dollar on imports
of engine components into the U.S. from its DAF truck unit in
Europe. Paccar said its truck sales during the quarter rose 13% to
$3.77 billion, as pretax profit from trucks soared 60% to $339.1
million.
Overall for the quarter ended Jan. 31, Paccar reported a profit
of $378.4 million, or $1.06 a share, up from $273.9 million, or 77
cents a share, a year earlier. Total revenue, which includes the
company's financing arm, climbed 10.3% to $4.83 billion. Analysts
had expected per-share profit of $1.01 and revenue of $4.68
billion.
In November, the European Commission charged that all truck
manufacturers in Europe, including Paccar, had participated in
anticompetitive practices. The commission said it would impose
significant fines on the manufacturers. Paccar said it is preparing
a response to the allegations, but provided no additional details
about the investigation.
Paccar's stock was recently trading up 3.3% at $65.98 a
share.
Angela Chen contributed to this article.
Write to Bob Tita at robert.tita@wsj.com
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