A slack market for new trucks and the sputtering national economy combined to send Paccar's sales and profits lower in 2007. The Bellevue-based truckmaker on...
A slack market for new trucks and the sputtering national economy combined to send Paccar’s sales and profits lower in 2007.
The Bellevue-based truckmaker on Tuesday said it earned $261.1 million, or 71 cents a share, in the fourth quarter. That was well short of the average Wall Street forecast of 82 cents a share, as reported by Thomson One Analytics, and 31.4 percent below what Paccar brought home in the fourth quarter of 2006.
Total revenue in the quarter slid 11.1 percent, to $3.76 billion, as gains in the company’s financing arm failed to keep pace with declines in truck sales. For the full year, Paccar made $1.2 billion in profit on total revenue of $15.2 billion — down 18 percent and 7.5 percent, respectively, from 2006.
The company tried to paint its financial results in the most favorable light possible. Mark Pigott, Paccar’s chairman and chief executive, called them “remarkable” given the 45.5 percent drop in industrywide U.S. and Canadian heavy-duty truck sales.
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Traders, however, didn’t seem convinced. Paccar shares fell $2.40, or nearly 5 percent, on Tuesday, closing at $45.77; they were down as much as $3.10 before recovering somewhat.
North American heavy-duty truck sales in 2007 totaled just 175,800, compared with 322,800 in the record-busting year of 2006. Sales that year bulged as shippers bought in advance of new emissions standards that took effect early last year.
In its earnings release, Paccar projected a modest recovery at best in overall North American truck sales this year: 175,000 to 215,000 vehicles, a cut from the 210,000-240,000 that Paccar had forecast in October.
Europe, where Paccar derives 40.5 percent of its total revenue, posted record heavy-duty truck sales in 2007: 340,000 units industrywide. This year, however, Paccar expects European sales to be essentially flat.
Two bright spots in Paccar’s business mix were the company’s aftermarket parts business — whose 2007 revenue of $2.3 billion was up about 18 percent from 2006 — and its finance unit, which lends money to customers to buy trucks.
The finance unit last year posted a pretax profit of $284.1 million on $1.19 billion in revenue — increases of 14.8 percent and 25.3 percent, respectively, from 2006.
Ken Gangl, Paccar’s treasurer, said the finance unit recorded net write-offs of $26 million in 2007, up from $14 million in 2006. But given the unit has $10.7 billion in assets on its portfolio, Gangl said, credit quality overall remains strong.
“We’ve seen a little softness in the United States and Canada, but nothing alarming,” he said.
Drew DeSilver: 206-464-3145 or firstname.lastname@example.org