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Strong European truck demand drives excellent profit margins

“PACCAR achieved good quarterly net income in the second quarter of 2016,” said Ron Armstrong, chief executive officer. “PACCAR’s financial results reflect favorable truck markets and good aftermarket parts and financial services results worldwide. I am very proud of our 23,000 employees who have delivered outstanding products and services to our customers.” Second quarter net … Continued

“PACCAR achieved good quarterly net income in the second quarter of 2016,” said Ron Armstrong, chief executive officer. “PACCAR’s financial results reflect favorable truck markets and good aftermarket parts and financial services results worldwide. I am very proud of our 23,000 employees who have delivered outstanding products and services to our customers.”

Second quarter net sales and financial services revenues were $4.41 billion, compared to $5.08 billion in the second quarter of 2015. PACCAR earned adjusted net income (non-GAAP) of $371.7 million ($1.06 per diluted share) in the second quarter of 2016, excluding a favorable $109.6 million adjustment to the non-recurring charge established in the first quarter this year for the European Commission (EC) investigation of all European truck manufacturers. On July 19, 2016 the EC concluded its investigation by reaching a settlement with DAF. Including the favorable adjustment to the EC charge, which is not taxable, PACCAR reported net income of $481.3 million ($1.37 per diluted share) in the second quarter of 2016. The company earned net income of $447.2 million ($1.26 per diluted share) in the second quarter last year.

For the first six months of 2016, PACCAR reported adjusted net income (non-GAAP) of $719.7 million ($2.05 per diluted share), excluding the $833.0 million non-recurring charge for the EC investigation. The company earned $825.6 million ($2.32 per diluted share) in the first six months of 2015. Including the non-recurring charge, PACCAR reported a net loss of $113.3 million ($.32 per diluted share) in the first six months of 2016. PACCAR’s regular quarterly dividend will not be impacted by the EC charge. Net sales and financial services revenues for the first six months of 2016 were $8.71 billion compared to $9.91 billion last year.

Armstrong added, “PACCAR’s strategic focus is to invest for growth in our core markets, while expanding our presence in emerging markets. PACCAR is earning excellent returns on its investments, achieving nearly 20 percent average annual after-tax return on equity over the last six years. These investments have included new Kenworth, Peterbilt and DAF vehicles, production of the fuel-efficient PACCAR MX engines in North America, the DAF Brasil truck factory, and increased capacity of PACCAR Parts’ distribution centers. In addition, the company expanded PACCAR Financial Services internationally and introduced many industry-leading technologies and services for our dealers and customers.” Bob Christensen, PACCAR president and chief financial officer, noted, “The company is investing for future growth in PACCAR integrated powertrain components, advanced driver assistance and truck connectivity technologies, a new DAF cab paint facility, logistics enhancements to its manufacturing facilities, and recently opened a new Parts Distribution Center in Renton, Washington.”

Financial Highlights – Second Quarter 2016
Highlights of PACCAR’s financial results for the second quarter of 2016 include:

  • Consolidated net sales and revenues of $4.41 billion.
  • Adjusted net income (non-GAAP) of $371.7 million, excluding a $109.6 million favorable adjustment to the charge related to the settlement of the EC investigation.
  • Net income of $481.3 million.
  • Truck, Parts and Other gross margins of 15.2%.
  • PACCAR Parts pre-tax income of $133.4 million.
  • Financial Services pre-tax income of $77.3 million.
  • Manufacturing cash and marketable securities of $3.40 billion.
  • Record quarterly cash generated from operations of $853.6 million.

Financial Highlights – First Half 2016
Highlights of PACCAR’s financial results for the first six months of 2016 include:

  • Consolidated net sales and revenues of $8.71 billion.
  • Adjusted net income of $719.7 million (non-GAAP), excluding a $833.0 million non-recurring charge for the EC investigation.
  • Net loss of $113.3 million.
  • PACCAR Parts pre-tax income of $268.0 million.
  • Financial Services pre-tax income of $157.6 million.
  • Cash generated from operations of $1.65 billion.
  • Medium-term note issuances of $1.34 billion.
  • Bank credit facilities of $3.0 billion renewed.

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