DDAIF Mercedes Benz Group AG (PK)

PACCAR Inc. (PCAR) plans to build a truck assembly plant in the city of Ponta Grossa, located in the state of Paraná in Brazil for its DAF line-up. The truck maker will invest $200 million for the 330,000-square-foot assembly facility.

The new plant is designed to assemble DAF LF, CF and XF line-ups in order to meet demand of the growing Brazilian transport industry. The company has chosen Ponta Grossa due to its productive workforce and proximity to strategic supplier partners and the port of Paranaguá.

Construction of the plant is expected to begin in 2011 and will be over in 2013. The company intends to hire up to 500 employees at the plant over time.

PACCAR, a Zacks #3 Rank (Hold) company, reported a profit of $239.7 million or 65 cents per share in the second quarter of the year, more than double of $99.6 million or 27 cents per share in the prior-year quarter. However, the truck maker’s profit missed the Zacks Consensus Estimate of 68 cents per share.

The improvement in profit reflected strong truck sales in North America and Europe and better aftermarket parts sales and financial services results worldwide. However, the company’s suppliers faced difficulty while catering to the robust increase in truck build rates.

PACCAR expects industry sales in the above 15-ton truck market in Europe in the range of 230,000-250,000 units for 2011. The company anticipates industry retail sales in the Class 8 truck markets of U.S. and Canada in the range of 180,000-200,000 vehicles in the year.

The company has targeted capital investments of $400-$500 million and R&D expenses of $275-$300 million for 2011 in order to develop new products and enhance manufacturing operating efficiency.

PACCAR is the third largest manufacturer of heavy-duty trucks (capacity of more than 15 metric tons) in the world after Volvo (VOLVY) and Daimler (DDAIF), and has substantial manufacturing exposure to light/medium trucks (capacity of 6–15 metric tons). The company continues to gain market share, especially with its DAF nameplate.

 
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