--Paccar reiterates 2012 U.S./Canada sales forecast
--Company says truck sales held down by modest US GDP
--Paccar cuts outlook for Europe
(Updates with comments from conference call and details about truck demand and truck market.)
By Bob Tita
Truck maker Paccar Inc. (PCAR) reiterated its 2012 sales outlook for the U.S. and Canada, providing a measure of support for a U.S. truck market that has shown signs of weakening lately.
Paccar, whose truck brands include Peterbilt and Kenworth, reported a 69% increase in first-quarter profit on sharply higher sales from the U.S. and Canada. The Bellevue, Wash., company said it expects industry-wide retail sales of heavy-duty trucks in the U.S. and Canada to be in a range of 210,000 to 240,000 trucks, up from 197,000 in 2011. The forecast was unchanged from January.
Paccar Chairman and Chief Executive Mark Pigott noted that the upper end of the company's range is just slightly better than the industry's normal replacement volume of about 225,000 a year. But Pigott dismissed characterizations that the U.S. truck market has stalled. He said demand for trucks is solid, though not spectacular because overall U.S. economic growth remains subdued and some segments of the truck market, particularly construction trucks, continue to be depressed.
"When the economy is really strong, then you're going to see some good growth, but that could be a while," Pigott said during a conference Tuesday call with analysts. "Our customers are in excellent shape. They're making good money. They're pleased with where their business is, but they're not expanding."
March orders for heavy-duty trucks in the U.S. Canada and the Mexico sank 30% from a year ago. February and January orders also were lower than a year earlier, causing investors and analysts alike to become increasingly bearish about the truck industry. Paccar recently announced plans to cut 10% of its workforce at an Ohio plant in response to a 10% reduction in orders for its Kenworth trucks. Pigott played down the significance of the workforce cuts, noting that employment at the Chillicothe plant had doubled in the last year or so, as the company rapidly expanded truck production.
Paccar, the second-largest seller of heavy-duty trucks in North America, behind Daimler AG's (DDAIY, DAI.XE) Freightliner brand, reported that first quarter sales of trucks in the U.S. and Canada increased 84% from a year ago to $2.93 billion.
About one-third of Paccar's annual sales come Europe, where the truck market has slumped because of the recessionary conditions in the European economy. Paccar's first-quarter sales in Europe fell 5.8% from a year ago to $1.11 billion. Paccar and other truck builders in Europe have scaled back production schedules in response to falling demand.
As a result, Paccar's tightened its 2012 industry sales forecast for heavy-duty trucks in Europe to a range of 210,000 to 230,000 trucks from 210,000 to 240,000 trucks previously.
Overall the company said it delivered 39,800 trucks during the first quarter, but predicted that second-quarter deliveries will be down 2%.
For the quarter ended March 31, Paccar's profit was $327.3 million, or 91 cents a share, up from $193.3 million, or 53 cents a share, a year earlier. Revenue increased 48% to $4.51 billion. Analysts polled by Thomson Reuters had projected earnings of 78 cents on revenue of $4.11 billion.
Paccar's shares were recently up 0.7% at $42.25.
-By Bob Tita, Dow Jones Newswires; 312-750-4129; [email protected]