Lower oil prices should cause more U.S. consumer spending, which will stimulate demand for commercial trucks this year, truck manufacturer Paccar Inc. said Friday.
Dozens of U.S. manufacturers this week have cited falling oil prices for undermining their sales and profits as oil-related customers cut back on orders for industrial equipment, construction machinery, steel and other durable items. But the maker of Peterbilt and Kenworth-brand trucks topped analysts’ fourth-quarter expectations by logging a 13% increase in truck sales.
Paccar expects industrywide retail sales of heavy-duty trucks weighing above 33,001 pounds in the U.S. and Canada to rise about 6% in 2015 over last year to a range of 250,000 to 280,000 vehicles.
“Our assessment of the impact of lower oil prices is [that it’s] a positive for the U.S. economy that will create additional consumer spending, which will benefit freight volumes and will be a positive for the truck industry,” said Chief Executive Ron Armstrong said Friday during a conference call with analysts.
Sales of heavy-duty trucks in the U.S. and Canada last year reached 253,151, the highest level since 2006, according to market forecaster ACT Research, which expects 2015 sales to rise 19% 302,000 trucks.
The Bellevue, Wash.-based Paccar is the second-largest seller of heavy-duty trucks in North America with 28% of the market. Mr. Armstrong dismissed suggestions from analysts that higher truck sales last year were mainly caused by oil and gas producers’ need for more trucks as they accelerated exploration and drilling activity.
“About 10% or less of Paccar’s volume is related to the oil and gas industry,” Mr. Armstrong said. “That’s a very small portion of what we do.”
Paccar’s fourth-quarter truck sales grew to $4 billion from $3.54 billion a year earlier. In 2014, trucks sales rose 12.2% from 2013 to $14.6 billion. Paccar’s sales volumes increased 4% last year from 2013 to 142,900 trucks. But unit sales in the U.S. and Canada increased 23%, helping offset an 18% decline Europe and a 7% drop in Latin America and the rest of the world.
Overall for quarter, the company reported an 18% increase in profit to $394 million, or $1.11 a share, from $334 million, or 94 cents a share, a year earlier.
Revenue climbed 11% to $5.12 billion. Analysts polled by Thomson Reuters expected a profit of $1.09 per share from revenue of $4.87 billion.