PACCAR 2012 Annual Report Download - page 37

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• The currency translation effect on sales and cost of sales primarily reflects a stronger euro.
• Truck gross margins in 2011 of 10.3% increased from 8.1% in 2010 from higher market demand and increased
absorption of fixed costs resulting from higher truck production.
Truck SG&A was $231.0 million in 2011 compared to $200.1 million in 2010. The higher spending is primarily due
to higher salaries and related expenses of $32.9 million (including $7.2 million from the effect of stronger foreign
currencies) to support higher levels of business activity. As a percentage of sales, SG&A decreased to 1.8% in 2011
from 2.8% in 2010 due to higher sales volume and ongoing cost control.
Parts
The Company’s Parts segment accounted for 16% and 21% of revenues in 2011 and 2010, respectively.
($ in millions)
Year Ended December 31, 2011 2010 % CHANGE
Parts net sales and revenues:
U.S. and Canada $ 1,386.5 $ 1,158.5 20
Europe 885.2 798.1 11
Mexico, South America, Australia and other 305.3 237.8 28
$ 2,577.0 $ 2,194.4 17
Parts income before income taxes $ 394.1 $ 313.5 26
Pre-tax return on revenues 15.3% 14.3%
The Company’s worldwide parts net sales and revenues increased due to higher market demand in all markets.
The increase in Parts segment income before income taxes and pretax return on revenues was primarily due to
higher sales volume in all markets and higher average gross margins.
The major factors for the change in net sales and revenues, cost of sales and revenues, and gross margin between
2011 and 2010 are as follows:
NET COST GROSS
($ in millions) SALES OF SALES MARGIN
2010 $ 2,194.4 $ 1,654.1 $ 540.3
Increase (decrease)
Aftermarket parts volume 258.8 157.8 101.0
Average aftermarket parts sales prices 69.5 69.5
Average aftermarket parts direct costs 41.8 (41.8)
Warehouse and other indirect costs 26.5 (26.5)
Currency translation 54.3 38.0 16.3
Total increase 382.6 264.1 118.5
2011 $ 2,577.0 $ 1,918.2 $ 658.8
• Aftermarket parts volume benefited from stronger retail markets, reflecting improving freight volumes and aging
truck fleets. This higher market demand resulted in increased aftermarket parts sales volume of $258.8 million
and related cost of sales by $157.8 million.
• Average aftermarket parts sales prices increased by $69.5 million reflecting improved price realization from
improved market demand.
• Average aftermarket parts costs increased $41.8 million from higher material costs.
• Warehouse and other indirect costs increased $26.5 million primarily due to higher costs to support the higher
sales volume.
• The currency translation effect on sales and cost of sales primarily reflects a stronger euro.
• Parts gross margins in 2011 of 25.6% increased from 24.6% in 2010 from a higher price realization from
improved market demand, primarily in North America.
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