PACCAR Inc. (PCAR) reported a profit of $239.7 million or 65 cents per share in the second quarter of the year that more than doubled from $99.6 million or 27 cents per share in the prior-year quarter. However, the truck maker’s profit missed the Zacks Consensus Estimate of 68 cents per share.
The improvement in profit reflected strong truck sales in North America and Europe and better aftermarket parts sales and financial services results worldwide. However, the company’s suppliers faced difficulty while catering to the robust increase in truck build rates.
Revenues in the quarter surged 61% to $3.96 billion, up from the Zacks Consensus Estimate of $3.58 billion.
Revenues in the Truck and Other segment shot up 66% to $3.70 billion. The pre-tax profit in the segment improved significantly to $286.4 million from $110.3 million a year ago.
The company’s DAF nameplate achieved a market share of 15.3% in the above 15-ton market in the first half of 2011. Meanwhile, its Class 8 retail market share in the U.S. and Canada stood at 26.7% in the same period
Revenues in PACCAR Financial Services (PFS) rose 8% to $258.0 million. Pretax profit improved to $56.9 million from $34.0 million in the second quarter of 2010 led by better finance margins and reduced credit losses. The provision for credit losses went down to $11.0 million from $17.4 million in the second quarter of 2010.
Financial Position
PACCAR’s cash and marketable debt securities was $2.85 billion as of June 30, 2011 compared with $2.43 billion as of December 31, 2010. Long-term remained unchanged at $150 million considering the same period of comparison. Consequently, the long-term debt-to-capitalization ratio remained steady at 2.5% compared with 2.7% as of December 31, 2010.
In the first half of the year, cash flow from operations decreased marginally to $792.0 million from $799.5 million in the same period of 2010, as the improvement in profits was more than offset by unfavorable changes in wholesale receivables on new trucks. Meanwhile, capital expenditures rose significantly to $117.5 million from $47.8 million in the previous year, due to new product development.
Outlook
PACCAR expects industry sales in the above 15-tonne truck market to range within 230,000-250,000 units in Europe for 2011. Whereas the company anticipates industry retail sales in the Class 8 truck markets of U.S. and Canada in the range of 180,000-200,000 vehicles.
The company has targeted capital investments of $400-$500 million and R&D expenses of $275-$300 million for 2011 in order to develop new products and enhance manufacturing efficiency.
Our Call
PACCAR, a Zacks #3 Rank (Hold) stock, is the third largest manufacturer of heavy-duty trucks (with a capacity of more than 15 metric tons) in the world after Volvo AB (VOLVY) and Daimler AG (DDAIF), and has substantial manufacturing exposure to light/medium trucks (with a capacity of 6–15 metric tons). The company continues to gain market share, especially with its DAF nameplate.
DAIMLER AG (DDAIF): Free Stock Analysis Report
PACCAR INC (PCAR): Free Stock Analysis Report
VOLVO AB ADR B (VOLVY): Free Stock Analysis Report
Get all Zacks Research Reports and be alerted to fast-breaking buy and sell opportunities every trading day.
Be the first to comment