PACCAR recently reported positive quarterly results, led in large part by its dedicated parts business unit. PACCAR Parts, which consists of 18 distribution centres, earned a record pretax income of $214.7 million in Q1 2020, a 3% increase over first quarter of 2019. It also earned a total quarterly revenue of $998.6 million, which is just a hair below the $1 billion figure achieved in same period in 2019.
While truck deliveries were affected by the COVID-19 pandemic, which resulted in PACCAR having to close its manufacturing facilities globally, parts and aftersales support helped PACCAR see good financial results overall. PACCAR CEO Preston Feight attributes the success of PACCAR parts to the fact that “they supported the shipment of medical supplies, food, infrastructure material, and essential goods to our communities around the world.” He adds that he is “very proud of our employees, their support of each other, and their commitment to deliver essential products and services to our customers.”
DAF, Kenworth & Peterbilt Market Share
PACCAR brands DAF, Kenworth, and Peterbilt all gained market share in the first quarter. DAF increased its share of the European 16-tonne truck segment to 16.7%, while DAF Brasil increased its market share of 40-tonne trucks from 6.1% to 8.7%. Kenworth and Peterbilt increased their market share of Class 8 trucks in the United States and Canada to 30.4% in Q1 2020.
“The outlook for global economies and truck markets is weaker due to the coronavirus pandemic,” says Gary Moore, executive vice president of PACCAR. “Governments worldwide have implemented fiscal and monetary actions to assist individuals and businesses and prepare for an eventual recovery. In this uncertain time it is difficult to estimate 2020 truck industry retail sales in North America, Europe, and South America.”
Other Financial Results
PACCAR’s total Q1 2020 revenue was $5.16 billion, down from $6.49 billion during same period in 2019, which resulted in a net income of $359.4 million, also down from $629 million in the first quarter of last year. Even so, the company received $425.9 million of cash flow from its operations during this period and currently has manufacturing cash and marketable securities totaling $4.3 billion.
In response to those lower figures, PACCAR is “rigorously aligning operating costs to reflect changing market conditions, including selectively reducing capital investment and research and development costs,” according to President and CFO Harrie Schippers. That includes reducing research and development costs by $45 million and capital expenditures by $100 million for 2020. The firm spent $71 million on research and development and $177.1 million on capital investments in the first quarter of 2020.