Paccar Tumbles on Weak Growth

Paccar Inc. (PCAR - Analyst Report) reported third quarter net income of $13.0 million or 4 cents per share, compared to a net income of $299 million or 82 cents per share in the prior-year quarter. Results were substantially short of the Zacks Consensus Estimate of 2 cents due to the continued impact of the recessionary economy on moving freight shipments and truck sales. 

Third quarter results included a one-time net gain of $9.0 million ($14.1 million pretax) related to the permanent closure of Peterbilt facility in Madison, Tennessee. 

Results aggravate underlying concerns that recovery could be weak and uneven as high unemployment continues to slacken the growth in consumer expenditure that drives the economy. 

Net sales and financial services revenues decreased 50.1% year over year to $2.0 billion. 

The company has projected big rig sales in the U.S. in the range of 100,000 to 110,000 vehicles in 2009 due to lower housing starts and auto production. However, the company expects sales to grow to a range of 110,000 to 140,000 trucks in 2010, still way short the normal levels of 225,000 to 250,000 vehicles. 

In Europe, the recovery is expected to be the slowest with 2010 sales expected between 150,000 and 180,000 vehicles. 

The company intends to continue to reduce costs to proactively align operating expenses, capital and research and development expenditures with the current market conditions.