Strong truck sales and increased lease and finance activity in the third quarter enabled Paccar to report yet another record profit Tuesday...
Strong truck sales and increased lease and finance activity in the third quarter enabled Paccar to report yet another record profit Tuesday.
The Bellevue-based manufacturer, which sells Kenworth and Peterbilt trucks in North America and DAF and Foden trucks overseas, posted a $304.8 million profit in the quarter ended Sept. 30, up 23.6 percent from the same period in 2004. Total revenue rose 21.4 percent, to $3.5 billion from $2.9 billion.
“It almost gets a little cliched with these guys — one great quarter after another,” said analyst JB Groh, who follows Paccar for D.A. Davidson in Lake Oswego, Ore.
Wall Street joined in the celebratory mood. On a day when broad market indexes were down slightly, Paccar shares rose $1.93 to close at $68.37; that gain followed a $2.36 rise Monday. Over the past two trading sessions, Paccar has gained 6.7 percent; it remains down 15 percent for the year, however.
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Paccar’s earnings, which equated to $1.78 per share, beat the Street’s consensus estimate of $1.74 per share.
The global truck business has benefited from robust economic growth and increased corporate capital spending in North America and, to a lesser degree, in Europe.
The commercial vehicles division of DaimlerChrysler, which includes Paccar rival Freightliner, on Tuesday reported third-quarter sales nearly 15 percent higher than the same quarter in 2004, and operating profit more than triple the corresponding figure a year ago.
Groh said Paccar’s truck sales were somewhat higher than he had expected, due in part to long-haul trucking firms’ use of the trucks — which have a reputation for high quality and comfort — as “driver retention tools.”
In addition, Groh said, some firms may be accelerating their planned truck purchases to beat stricter emissions requirements for diesel engines that take effect in 2007, aiming to avoid the cost as well as uncertainty about the new engines’ performance.
But while Groh said he thinks there will be some more “pre-buying” in 2006 — leading to another good year for Paccar — he doesn’t expect a huge boom next year, nor a corresponding plunge in 2007.
For its part, Paccar said it expects industrywide sales of Class 8 long-haul trucks next year to be between 290,000 units — the same level it expects for full-year 2005 — and 310,000 units, a relatively modest increase coming after the 25 percent annual growth projected for this year.
Paccar, which spent $345 million since December 2004 to buy back 5 million of its shares, said Tuesday it had authorized a new 5 million-share repurchase program.
Companies frequently buy back their own shares when they believe the market has undervalued them. By reducing the number of tradable shares outstanding, they hope to boost the value of the remaining shares, increase earnings per share, and save on dividend payments.
Last month, Paccar announced a regular quarterly dividend of 25 cents per share, payable Dec. 5 to shareholders of record as of Nov. 17. That was up from the previous dividend of 21 cents per share.
Drew DeSilver: 206-464-3145 or email@example.com