PACCAR and PACCAR Financial Services Take Hits to Q2 Income

PACCAR reported net income of $147.7 million in Q2/20 compared with $619.7 million earned in the same period last year. Second quarter net sales and financial services revenues were $3.06 billion compared with $6.63 billion achieved in Q2/19.

PACCAR further reported first half net income of $507.1 million compared with $1.25 billion earned in the first six months of last year. Net sales and financial services revenues for the first six months of 2020 were $8.22 billion compared with the $13.12 billion achieved last year.

“PACCAR (Nasdaq: PCAR) achieved good quarterly revenues and net income in the second quarter of 2020,” Preston Feight, CEO of PACCAR, said. “PACCAR closed its factories for five weeks at the beginning of the quarter and has gradually resumed production while enhancing operating processes and procedures for employee health and well-being, manufacturing efficiency and customer satisfaction. I am very proud of our outstanding employees who delivered excellent production and distribution performance while enhancing PACCAR’s rigorous health and safety standards.

“PACCAR’s truck production and PACCAR Parts’ aftermarket sales steadily increased as the quarter progressed. PACCAR’s quarterly profits are a direct result of its proven business model: premium trucks and transportation solutions, flexible manufacturing processes, a strong balance sheet, and rigorous cost control while maintaining R&D and capital investments that drive long-term growth.”

PACCAR recorded global truck deliveries of 18,100 units in Q2/20.

“The U.S. and Canada Class 8 truck market is rebounding as state and local economies re-open,” Mike Dozier, senior vice president of PACCAR, said. “Customers benefited from lower fuel costs, and many sectors experienced higher freight volumes and improved freight pricing as the quarter progressed. Class 8 truck industry orders in June were 28% higher than June last year.”

Class 8 truck industry retail sales in the U.S. and Canada are estimated to be in a range of 160,000-190,000 trucks in 2020, although the market size and economy could be impacted if there was a resurgence of COVID-19. Peterbilt and Kenworth achieved U.S. and Canada Class 8 truck retail sales market share of 29.6% through June this year compared with 29.1% during the same period last year.

“Customer demand for fuel-efficient DAF XF, CF and LF trucks bounced back in May and June as the European economies improved,” Harry Wolters, president of DAF, said.

European truck industry registrations in the above 16-tonne market are estimated to be in a range of 190,000-220,000 vehicles this year.The South American above 16-tonne truck market is projected to be in a range of 60,000-80,000 trucks in 2020.

“Customers appreciate the durability and reliability of DAF trucks in Brazil, which is one of the most demanding operating environments in the world,” Mike Kuester, assistant vice president of South America for PACCAR, said. “DAF achieved a record 9.1% market share in the Brazil above 40-tonne truck segment in the first half of this year.”

PACCAR Financial Services (PFS) has a portfolio of 202,000 trucks and trailers, with total assets of $15.05 billion. PACCAR Leasing (PacLease), a truck leasing company, is included in this segment. Q2/20 PFS pre-tax income in 2020 was $55.5 million compared with $80.3 million earned in the second quarter last year. Q2/20 revenues were $360.3 million compared with $361.4 million achieved in Q2/19. For the first six months of 2020, PFS earned pre-tax income of $103.8 million compared with $164.3 million last year. First-half 2020 revenues were $744 million compared with $710.9 million for the same period a year ago.

“PFS’ portfolio performed well during the second quarter of 2020,” Todd Hubbard, vice president at PACCAR, said. “The used truck market is experiencing lower vehicle resale values. PACCAR Financial is investing in worldwide used truck retail centers to sell an increased number of used trucks at retail prices, which enhances used truck sales margins. PFS recently opened used truck centers in Denton, Texas, and Prague, Czech Republic, and plans to open a used truck facility in Madrid, Spain.”

“PACCAR’s excellent balance sheet, complemented by its A+/A1 credit ratings, enables PFS to offer competitive retail financing to Kenworth, Peterbilt and DAF dealers and customers in 26 countries on four continents,” Craig Gryniewicz, president of PACCAR Financial, said. “We have excellent access to the commercial paper and medium-term note markets, allowing PFS to profitably support the sale of PACCAR trucks.”

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