PACCAR Achieves Record Sales and Earnings
20 July 1998
PACCAR Achieves Record Sales and Earnings for Second Quarter, First Half
BELLEVUE, Wash.--July 20, 1998--PACCAR Inc reported record sales and income from operations for the second quarter and first half of 1998, according to Mark C. Pigott, PACCAR chairman and chief executive officer.Second quarter consolidated net sales increased 16 percent to over $1.8 billion compared to sales of $1.6 billion in the second quarter of 1997. Net income for the quarter was $104.9 million ($1.33 per share diluted), an increase of 47 percent compared with $71.5 million ($.92 per share diluted) earned during the same quarter a year ago.
First half 1998 sales were $3.6 billion, an increase of 18 percent from the $3.0 billion recorded last year. Net income of $205.3 million ($2.61 per share diluted) for the first half of 1998 exceeded 1997 first half earnings of $129.4 million ($1.66 per share diluted) by 59 percent.
"Increased new truck demand for our quality products, coupled with greater production capacity at all manufacturing locations, contributed significantly to the positive financial results," said Pigott. "The truck market in North America continues to be strong with industry orders through June ahead of last year. At the same time, the European truck market is anticipating 1998 heavy-duty truck sales at near-record levels. Customers continue to recognize the benefits of the new Kenworth T2000, Peterbilt classic 379 and the DAF 95XF - European Truck of the Year. In addition, sales for the DAF 85CF, 75CF and 65CF, launched earlier this year, have exceeded forecasts. Powered by the new DAF 9.2L engine, these new trucks offer excellent aerodynamics, outstanding fuel economy and superior handling. Our products, supported by over 1700 service points worldwide, typically have the highest market resale value and the best operating costs in the marketplace," he said.
"Industry backlogs continue to grow in Europe and North America, and we expect excellent demand in both markets through the end of the year barring any unforeseen, negative developments in the overall economy. Third quarter financial results will include the impact of the traditional summer holiday factory closures at DAF, Leyland and Foden," he added.
Second quarter and first half profits for PACCAR's finance and leasing companies were comparable to those recorded a year ago. Jim Shiplet, PacLease President, commented, "with over 150 leasing locations and 11,000 units leased, PacLease is the leading OEM leasing company in North America. Our entry into Mexico is proceeding well with customers realizing the benefit of leasing in their marketplace."
PACCAR's other businesses, which include industrial winches and retail auto parts, increased sales and earnings for both the quarter and first half of 1998 compared with year ago periods.
"There were many significant developments for PACCAR during the second quarter," Pigott stated. In order to meet growing demand, Kenworth Mexicana is investing to expand its factory capacity. KenMex, which celebrates its 40th anniversary next year, is the leader in the Class 8 tractor market in Mexico with more than 50 percent market share. To enhance its customer support network, PACCAR Parts is opening a new distribution center in San Luis Potosi, Mexico. This $10 million, 75,000 sq. ft. facility, dedicated solely to truck customers, will provide parts to customers in Mexico and Latin America.
Additionally, during the quarter, PACCAR completed its acquisition of Leyland Trucks Limited. Leyland is the leading British manufacturer of trucks in the 6-18 ton commercial segment including the 45 and 55 Series distribution trucks marketed exclusively in Europe by DAF Trucks." The addition of Leyland brings three important benefits to PACCAR," said Pigott. "It provides an outstanding workforce of 760 employees and a state-of-the-art, 600,000 sq. ft. factory, superior Class 4-7 cabover products that have the potential to be used throughout the world and additional production capacity to meet our customers' growing transportation requirements. With the acquisition of Leyland, PACCAR is in an excellent position to enhance its leadership in Europe as the provider of premium truck products for the marketplace."
The strike at the Peterbilt factory in Nashville, which began on May 4, has not been settled. To meet increasing customer demand, Peterbilt has raised the production rate at its Denton facility and recently began utilizing skilled temporary employees at Nashville.
PACCAR, a $6.5 billion company, is a leader in the design, development and manufacture of high quality light-, medium- and heavy-duty trucks. Last year, the company sold more than 79,000 trucks worldwide under the Kenworth, Peterbilt, DAF and Foden nameplates. It also provides financial services and distributes truck parts related to its principal business. In addition, the Bellevue, Washington-based company manufactures industrial winches and sells general automotive parts and accessories through its retail outlets.
PACCAR shares are traded on the NASDAQ Exchange, symbol PCAR, and its homepage can be found at www.paccar.com.
PACCAR Inc
SUMMARY INCOME STATEMENTS
(in millions of dollars, except per share amounts)
Three months Ended Six Months Ended
June 30 June 30
1998 1997 1998 1997
Manufacturing and Parts
Net Sales $1,846.3 $1,588.7 $3,592.7 $3,032.1
Financial Services
Revenues $ 77.4 $ 69.4 $ 150.5 $ 137.5
Income Before Taxes:
Manufacturing and Parts $ 138.5 $ 89.5 $ 267.0 $ 152.3
Financial Services 17.3 17.0 34.3 34.2
Investment Income 7.9 5.5 14.7 10.6
Other, net .5 (1.2) 5.3 2.4
Total Income Before
Income taxes 164.2 110.8 321.3 199.5
Income taxes 59.3 39.3 116.0 70.1
Net Income $ 104.9 $ 71.5 $ 205.3 $ 129.4
Net Income Per Share:(a)
Basic $ 1.34 $ .92 $ 2.63 $ 1.66
Diluted $ 1.33 $ .92 $ 2.61 $ 1.66
(a) Adjusted to reflect a two-for-one split effective in 1997