Features International News — 30 July 2018

PACCARs amazing run of constant profits which is zeroing in on a remarkable 80 years straight, has continued with the US based global truck maker reporting sharply higher profits and record second quarter revenue.

The maker of Peterbilt, Kenworth and DAF brands reported that its net income surged 50 per cent to $AUD 756.4 million ($US 559.6 million) in the second quarter compared with the same period in 2017. The Seattle based truck manufacturer registered net sales and revenue of $AUD7.85 billion, an increase of 23 per cent compared with the same quarter a year earlier.

The gross profit margin for truck and parts sales hit 15 per cent in the second quarter, higher than some stock analysts had expected and the company said it expected it to remain at about that level for the remainder of the year.

“PACCAR is realising the benefit of strong truck markets worldwide, with growing economies and freight volume increasing demand for the company’s trucks,”  said the PACCARschief executive, Ron Armstrong.

“We feel very good about 2019. We see no signs of abatement in terms of the second half and heading into 2019,” Armstrong said.

Class 8 heavy truck retail sales for the U.S. and Canada have increased by 32 per cent year-to-date and are expected to be in a range of 265,000-285,000 vehicles in 2018, Armstrong said..

Analysts said they were particularly impressed by PACCARs ability to convert revenue into earnings despite supply chain bottlenecks that have plagued some other truck makers.

PACCAR delivered 46,400 trucks in the second quarter, up 18 per cent from the same period last year. In Europe, its DAF brand enjoyed 16.5 per cent market share in the over-16-tonne sector, which is up from 15.3 per cent last year.  DAF orders were up 26 per cent in the first half of the year compared with the same period last year.

Europe remains a strong market for the company and accounted for about a quarter of the companys revenue in the second three months of this year about the same as in identical period in 2017.

“The economy has been in growth mode for the last three to five years and the central banks and others are managing inflation and growth quite prudently,” said Armstrong. “So there’s nothing we see on our radar that’s going to change the economic outlook of Europe for the near- or mid-term,” he added.

He also said there has been no immediate financial impact from new tariffs. And the company has been able to avoid material supply chain disruptions.

 Armstrong said the company is continuing to invest in alternative powertrain vehicles research and development, including battery electric, hydrogen fuel cell and hybrid vehicles, despite low demand.

“The economic viability of electric is not great but you have to be prepared as the regulatory environment dictates some level of zero emission vehicles,said Armstrong.

“The reality is, the price of electric vehicles is more then twice the cost of diesel and there is the range issue and weight issue and infrastructure is also lacking,” he said..

“A lot has to happen for that to be any sizable portion of the market in the next five to 10 years,” Armstrong said.

The company is field-testing alternative fuel trucks in the U.S. and Europe, including at the ports of Los Angeles and Long Beach. The Kenworth T680 Zero Emission Cargo Transport is expected to start testing there this month. It is designed to deliver 130 miles of range at 560 horsepower before refueling.

Overall, PACCAR this year will invest $AUD574 million to $AUD 642 million in capital and $AUD 405 million to $AUD439 million in research and development expense, the company said. The money will go to new truck models, integrated powertrains, including alternative fuel systems, enhanced truck designs, driver-assistance- and autonomous technology and truck connectivity.

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