OEMs Post Mixed Quarterly Earnings

This story appears in the Nov. 4 print edition of Transport Topics.

Truck manufacturers Daimler Trucks and Paccar Inc. posted higher third-quarter profits, but Volvo AB reported lower earnings.

Daimler AG said its global truck division posted earnings before interest and taxation of 522 million euros, up 4% from the previous year’s quarter.

Volvo AB, however, said its income before interest and taxes dropped 18% to 2.4 billion kronor.

Paccar Inc. said its profit climbed 32% because of increased truck deliveries and record profits in its parts and financial service businesses.

“Our customers in North America are benefiting from higher fleet utilization and record freight tonnage, which are driving industry fleet replacement,” Mark Pigott, Paccar’s chairman and CEO, said in the statement.

Paccar, the parent company of Kenworth Trucks Co. and Peterbilt Motors Co., said its net income rose to $309.4 million, or 87 cents per share, from $233.6 million, or 66 cents, in the same quarter a year ago.

Quarterly revenue was $4.3 billion, a 13% increase over last year, the company said.

Truck revenue climbed 14% to $3.3 billion, while parts sales increased 10% to $715 million and financial services revenue rose 7% to $294 million.

Meanwhile, Daimler’s revenue in the truck segment slipped 1% to 8 billion euros. It blamed the decline on changes in exchange rates and said that revenue increased 8% after adjusting for those effects.

Daimler Trucks’ unit sales rose 4.5% to 124,465, the company said. It sells the Freightliner and Western Star brands in North America, as well as the Detroit brand of diesel engines, transmissions and axles.

For North America, Daimler said, “it has been possible to maintain stable sales figures despite the recent decline in demand from the market, which has led to significant growth in market share in Classes 6-8.”

Companywide, the German truck and car manufacturer reported “significantly improved” results: a 53% increase in profit and 5% revenue growth.

Volvo AB’s overall sales fell 4.9% to 64.9 billion kronor, including a 1% drop to 43.2 billion kronor in its trucks segment, the company said.

Global truck deliveries rose 4% in the third quarter to 48,261 units, including a 4% increase to 11,072 deliveries in North America, the Sweden-based truck maker said.

Quarterly order intake in North America rose 18% year-over-year to 5,223 for the Volvo Trucks brand and jumped 49% to 4,964 orders for Mack Trucks.

In North America, “slow economic growth and weakness in the manufacturing sector during the second quarter affected third-quarter retails,” Volvo said. “However, the construction market continues to recover, and replacement demand remains high.”

In announcing earnings, Volvo also said it plans to cut about 2,000 “white-collar” employees and consultants throughout the company in 2014 as part of an efficiency plan disclosed in September to save 4 billion kronor ($630 million) annually.

Volvo Group spokesman John Mies said it’s “too early to say” what effects the Volvo Group efficiency program will have in North America.

However, Volvo did announce last month that it would add up to 140 full-time jobs at its engine and transmission plant in Hagerstown, Md., by 2015.

David Leiker, an analyst at Robert W. Baird & Co., said Volvo’s third quarter represented “a meaningful setback relative to what investors have been expecting,” but he said his firm continues to believe in the company’s three-year transformation plan to improve its business model and boost profitability.

Volvo said it expects full-year North American heavy-duty truck sales to be about 240,000 units, down from its previous forecast of 250,000.

Daimler said it continues to anticipate that the North American truck market will contract 5% for the year.

“Due to political uncertainty in the United States, no significant upward trend is likely for North America in the remaining months of the year,” the company said.

Paccar said it expects full-year Class 8 retail sales in the United States and Canada to be in the range of 205,000 to 215,000.

In early September, Navistar International Corp. reported a loss of $247 million, or $3.06 per share, in its fiscal third quarter ended July 31.