Paccar Inc., which owns the Peterbilt and Kenworth truck brands, reported its best-ever first quarter revenue and profits Tuesday.
Paccar’s first-quarter earnings surged 65 percent to $512 million in the first three months of the year compared with the same period in 2017. The Bellevue, Wash., manufacturer logged net sales of $5.7 billion, an increase of 33 percent compared with the same quarter a year earlier.
“The U.S. economy’s growth is driving record freight tonnage,” said Ron Armstrong, the company’s chief executive, during a call with investors. “Customers are operating at high utilization levels and are expanding their fleets.”
Paccar’s report was better than Wall Street investment analysts expected, said J.P. Morgan’s Ann Duignan. “It looks like demand is being driven by Class 8 sleepers and day cabs,” Duignan said.
The need to ship more freight is contributing to higher sales of Paccar trucks in the heaviest Class 8 weight segment. Orders more than doubled in the U.S and Canada over first quarter 2017.
The company increased the lower end of its annual industry U.S. and Canada sales forecast for Class 8 trucks to 265,000 from 235,000 and the higher end to 285,000 from 265,000.
The new estimate reflects the strong freight transport activity and truck demand as well as the steady economic outlook, Armstrong said.
“We believe there could be further increases to these forecasts,” said David Leiker, an analyst at Robert W. Baird & Co.
Paccar’s parts division also achieved record revenue in the first quarter of 2018. The company’s parts sales topped $940 million, an increase of 19 percent over the same period last year. Earnings grew 27 percent to $191.8 million in the first quarter.
Investments in product distribution centers, increased dealer locations, expanded product lines, fleet services and e-commerce programs as well as growing market share has contributed to the growth, said David Danforth, who heads the division.
Paccar also did well in Europe, where sales of its DAF trucks increased 41 percent. Paccar recently invested $110 million in its Westerlo, Belgium factory to increase capacity.
The company also expanded offerings of its DAF brand lineup in Brazil, Panama and the Andean region, which includes Venezuela, Colombia, Peru, Ecuador and Bolivia.
As part of its long-term strategy, Paccar has invested $3 billion in new facilities, products and services over the past five years.