Profits and sales at Paccar, the owner of the Peterbilt and Kenworth truck brands, plunged in the fourth quarter as the market for big rigs turned sour.
Paccar said net income dropped to $288.8 million in the fourth quarter, almost a 17 percent decline compared with the same period a year earlier. Full-year profits sagged 67 percent to $521.7 million compared with 2015, the company said when it reported its financial results Tuesday.
Sales of Paccar trucks in the Class 8 heaviest weight segment fell 22 percent in the fourth quarter compared with the same period a year earlier.
Company executives said they’re optimistic that truck sales will improve this year.
“The tone of conversations [among dealers] are generally positive,” Robert Christensen, Paccar’s president and chief financial officer, said during a conference call Tuesday. “I just came back from the North American truck show in New Orleans and dealers are looking optimistically toward the year. It should be a very good year for the truck industry again in 2017.”
Paccar, which also owns the DAF truck brand in Europe, said sales of trucks, parts and other products totaled $3.77 billion in the fourth quarter compared with $4.06 billion in the same quarter last year. Analysts polled by Capital IQ had pegged revenue at $3.84 billion.
For the full year, sales totaled $15.8 billion, down from $17.9 billion the prior year, Paccar said.
Paccer’s new truck deliveries in the quarter totaled 14,400 in the U.S. and Canada, down 6.9 percent year-over-year. For the full year, new-truck sales totaled 71,500 last year, well below the 91,300 sold in 2015.
Overall, Class 8 truck sales in the U.S. and Canada fell to 216,000 last year versus 278,000 in 2015, Paccar said. The company said it now has a 28.5 percent share of the truck market in the U.S. and Canada, up from 27.4 percent in 2015. Truck sales for the industry are pegged at a range of 190,000 to 220,000 in 2017.
Pricing pressure has been evident in the market and that’s bled into the used-truck market as prices declined about 10 percent year-over-year. Paccar said it expects that to improve in 2017.
“We’re actively engaged in working with our customers in lease returns, trade packages, and we opened our newest truck facility in Chicago, so we’re building our capabilities to handle additional volumes of used trucks,” said Ron Armstrong, Paccar’s chief executive.
Analysts on the company’s conference call asked about the effects of both the UK decision to leave the European Union – known colloquially as Brexit – and new policies proposed by President Donald Trump.
Paccar executive said that they haven’t yet seen any impacts from the Brexit vote and will make plans based on current regulations.
“It’s difficult to plan based on speculation, so we’re developing our products for [the regulations] that are in place,” Armstrong said. “If those change, we’ll adapt accordingly.”