PACCAR’s 2Q Earnings Up 5%

July 22, 2008
PACCAR earned $313.5 million ($0.86 per diluted share) for the second quarter of 2008, an increase of 5 percent

PACCAR earned $313.5 million ($0.86 per diluted share) for the second quarter of 2008, an increase of 5 percent compared to $298.3 million ($0.79 per diluted share) earned in the second quarter last year.

Second-uarter net sales and financial services revenues increased to $4.11 billion from $3.72 billion in 2007. Net sales and financial services revenues for the first six months of 2008 were $8.05 billion compared to $7.70 billion last year. For the first six months of 2008, PACCAR reported net income of $605.8 million ($1.65 per diluted share), compared to $663.9 million ($1.77 per diluted share) in 2007.

“PACCAR benefited from balanced global diversification, with over 65 percent of revenues originating outside the U.S. and continued solid performance from the company’s aftermarket parts and financial services businesses,” said Mark C. Pigott, chairman and chief executive officer. “Robust demand for PACCAR products in Europe and international markets continues to generate excellent earnings and provide opportunities for growth, tempered by the continued softness in the U.S. and Canadian truck markets.

In May, the steel structure for PACCAR’s $400 million engine manufacturing and assembly facility in Columbus, Mississippi was completed. “Construction is on schedule and is due to be completed in late 2009,” said Jim Cardillo, PACCAR executive vice president. The facility will complement the company’s engine factory in the Netherlands and expand the manufacture of PACCAR 12.9L and 9.2L engines for use in Kenworth, Peterbilt and DAF vehicles.

In June, PACCAR Parts began operations at its new 260,000-square-foot parts distribution center (PDC) in Budapest, Hungary. The PDC supports DAF’s dealers and customers in Central and Eastern Europe. PACCAR Parts also completed a 45,000-square-foot expansion of the San Luis Potosi, Mexico, PDC. This investment will provide increased service to Kenworth dealers in Mexico where Kenworth’s trucks have earned a 40 percent share of the Class 8 market.

“PACCAR Parts operates 13 strategically located PDCs throughout the world providing daily delivery of aftermarket parts to PACCAR’s growing base of dealers and customers,” said Rick Gorman, PACCAR Parts general manager and PACCAR vice president. “PACCAR Parts has more than tripled its sales since 1996, reaching $2.3 billion in 2007.”

For over a decade, PACCAR has achieved an annual goal of improving operating efficiency in its manufacturing facilities by 5-7 percent through Six Sigma, focused capital investment and optimized product design. This proactive lean production philosophy has enabled the company to partially offset the increasing commodity prices affecting components such as tires, steel rails, lubricants and cab panels. George West, PACCAR vice president, commented, “Kenworth’s Chillicothe factory recently established a new productivity record, which is remarkable considering the lower build rates in today’s challenging market.” Kenworth is investing nearly $30 million to install a second robotic cab paint facility, which will enhance product quality and increase capacity and productivity.

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