Cummins Reports Bump in ProfitPosted: Updated:
Columbus-based Cummins Inc. (NYSE: CMI) is reporting first quarter net income of $338 million, compared to $282 million for the same period last year. The engine manufacturer has increased its revenue forecast and Chief Executive Officer Tom Linebarger says demand in the North American market is improving. April 29, 2014
COLUMBUS, Ind. - Cummins Inc. (NYSE: CMI) today reported results for the first quarter of 2014.
First quarter revenue of $4.4 billion increased 12 percent from the same quarter in 2013. The increase year-over-year was driven by stronger demand in on-highway markets and distributor acquisitions in North America.
Revenues in North America increased 25 percent while international sales were flat compared to the first quarter a year ago. Within international markets, weakness in India, Australia, Mexico and Brazil offset higher revenues in China and Europe.
Earnings before interest and taxes (EBIT) were $528 million for the first quarter or 12.0 percent of sales. This compares to $437 million or 11.1 percent of sales a year ago.
Net income attributable to Cummins in the first quarter was $338 million ($1.83 per diluted share), compared to $282 million ($1.49 per diluted share) in the first quarter of 2013.
"We delivered good incremental margins in the first quarter as demand in on-highway markets in North America improved. We are also well on track to deliver the expected benefits from our North American distributor acquisitions as we execute our plans and end market demand improves. Conditions in a number of international markets remain very weak, particularly in India and Australia, leading to lower demand for power generation and mining equipment," said Chairman and CEO Tom Linebarger. "We continue to release exciting new products that will drive future profitable growth and we repurchased 3 million shares in the first quarter, consistent with our commitment to return 50 percent of full year operating cash flow to shareholders through a combination of dividends and share repurchase."
Based on the current forecast, Cummins expects full year 2014 revenues to grow between 6% and 10%, up from its previous forecast of growth of between 4% and 8%, due largely to improving demand in North America. EBIT is expected to be in the range of 12.75 to 13.25 percent of sales.
Other recent highlights:
For the seventh consecutive year, Cummins has been named one of the world's most ethical companies by The Ethisphere Institute;
FORTUNE magazine named Cummins one of America's Most Admired Companies; and
Cummins became the first company to receive EPA Tier4 Final certification for high-horsepower generator sets.
First quarter 2014 detail (all comparisons to same period in 2013)
Sales - $2.6 billion, up 11 percent
Segment EBIT - $269 million, or 10.5 percent of sales, compared to $195 million or 8.5 percent of sales
Increased demand in on-highway markets in North America offset weakness in global mining and power generation markets
Sales - $1.2 billion, up 21 percent
Segment EBIT - $167 million, or 13.6 percent of sales, compared to $119 million or 11.7 percent of sales
Higher demand in on-highway markets in North America, Europe and China more than offset weaker demand in Brazil
Power Generation Segment
Sales - $639 million, down 14 percent
Segment EBIT - $25 million, or 3.9 percent of sales, compared to $51 million or 6.8 percent of sales
Lower revenues in most markets particularly India, North America and Asia Pacific
Sales - $950 million, up 22 percent overall and up 1 percent excluding acquisitions
Segment EBIT - $76 million, or 8.0 percent of sales, compared to $95 million or 12.2 percent of sales, with currency being the largest driver of the reduction in earnings
Higher revenues were primarily driven by acquisitions and stronger demand for parts and service in the North American and Asia Pacific regions.
Cummins Inc., a global power leader, is a corporation of complementary business units that design, manufacture, distribute and service diesel and natural gas engines and related technologies, including fuel systems, controls, air handling, filtration, emission solutions and electrical power generation systems. Headquartered in Columbus, Indiana, (USA) Cummins currently employs approximately 48,000 people worldwide and serves customers in approximately 190 countries and territories through a network of approximately 600 company-owned and independent distributor locations and approximately 6,800 dealer locations. Cummins earned $1.48 billion on sales of $17.3 billion in 2013. Press releases can be found on the Web at www.cummins.com. Follow Cummins on Twitter at @Cummins and on YouTube at CumminsInc.
Source: Cummins Inc.