Strong 3Q Demand in North America Lifts Results for Paccar, Volvo, Daimler

This story appears in the Nov. 3 print edition of Transport Topics.

Paccar Inc. and the global truck divisions of Daimler AG and Volvo AB reported higher third-quarter earnings, aided by gains in North America.

Paccar said quarterly profit rose 20% to $371.4 million, from $309.4 million in the same period last year. Earnings per share rose to $1.04 from 87 cents.

Daimler said operating income at its truck division grew 13% to 588 million euros (about $749 million) from 522 million euros ($665 million) a year earlier.

“The main driver of the earnings growth was the ongoing, very positive development of unit sales in the Nafta region,” Daimler said in its Oct. 23 report.

Volvo said its truck segment’s operating income climbed 16% to 2.19 billion kronor ($299 million) from 1.89 billion kronor ($258 million) a year earlier, excluding restructuring charges.

Paccar delivered 37,400 trucks worldwide during the quarter, up 6% from a year earlier and an 11% increase from the second quarter, CEO Ron Armstrong said.

“This growth reflects increased truck deliveries in the U.S. and Canada due to many customers expanding their fleets and the ongoing replacement of older trucks,” he said on the company’s Oct. 28 earnings call.

“Our customers are benefiting from positive economic trends that are generating record freight tonnage and higher fleet utilization,” said Armstrong, who pointed specifically to strength in the U.S. automotive and housing sectors, as well as lower fuel prices. He also cited improving freight rates.

Paccar makes Kenworth- and Peterbilt-branded trucks.

Daimler Trucks, which sells Freightliner and Western Star vehicles in North America, said its third-quarter sales in that region climbed 25% to 43,868 units, including a 28% increase to 39,125 in the United States. Worldwide sales edged up 1% to 125,556 trucks.

Although most major global markets faced “difficult economic conditions,” demand was “favorable” in North America, the Stuttgart, Germany-based manufacturer said.

Volvo’s quarterly truck deliveries climbed 26% to 13,972 in North America, but they slipped 5% to 45,939 worldwide.

“Our North American truck operations reported a considerable earnings improvement with increased markets shares for both the Volvo and Mack brand,” CEO Olof Persson said in the Gothenburg, Sweden-based company’s Oct. 24 report.

North American orders for Volvo-brand trucks soared 80% from a year earlier to 9,412, while orders for Mack trucks jumped 66% to 8,258, the company said.

“Customer confidence in the U.S. economy continued to grow, as did freight demand and construction activity,” Volvo said.

In September, Navistar International Corp. reported on its fiscal third quarter ended July 31.

The Lisle, Illinois-based truck and engine maker slashed its quarterly loss to $2 million, or 2 cents per share, compared with a loss of $247 million, or $3.06, a year earlier, on lower warranty costs and higher production.

Navistar is scheduled to report in December on its fourth quarter and fiscal year ending Oct. 31.

Paccar said third-quarter revenue rose 15% to a record $4.93 billion.

Daimler Trucks’ worldwide revenue grew 6% to 8.46 billion euros ($10.78 billion) in the quarter.

Volvo said quarterly net sales at its global truck division rose 4% to 45.06 billion kronor ($6.14 billion).

Paccar’s North American factories have increased build rates to meet “strong demand” for trucks, Armstrong said.

The Bellevue, Washington-based truck and engine maker expects its global truck deliveries to rise 5% to 7% sequentially in the fourth quarter, he said.

On Daimler’s Oct. 23 earnings call, finance chief Bodo Uebber said the company expects operating income at the global truck division to remain at a “good” level in the fourth quarter, supported primarily by the North American market and the company’s efficiency measures.

Daimler said orders for its trucks in North America climbed 19% in the quarter to 39,154, including a 13% increase to 34,057 in the United States.

Paccar boosted its full-year estimate for industrywide Class 8 retail sales in the United States and Canada to between 245,000 and 255,000 trucks, which would be the highest level since 2006. The latest estimate was up from its previous projection of 230,000 to 250,000 sales.

Paccar also forecast that 2015 Class 8 retail sales would be between 240,000 and 270,000 vehicles.

That estimate implies “slight” growth next year, Robert W. Baird & Co. analyst David Leiker said in an investors note.

Volvo raised its full-year 2014 forecast for the North American market to 270,000 new heavy-duty truck registrations, up from a previous outlook of 260,000.

The company also said it expects the market to continue growing in 2015, to about 280,000 trucks.