Cummins Posts Profit, Lowers Full-Year Outlook
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As a subscriber you can listen to articles at work, in the car, or while you work out. Subscribe NowColumbus-based Cummins Inc. (NYSE: CMI) is reporting third quarter net income of $355 million, compared to $352 million for the same period last year. The earnings were below analysts' expectations. The engine manufacturer is lowering its full-year outlook due to weak demand in most markets. October 29, 2013
News Release
COLUMBUS, IN — 10/29/13 — Cummins Inc. (NYSE: CMI) today reported results for the third quarter of 2013.
Third quarter revenues of $4.3 billion increased 4 percent from the third quarter of 2012. Revenues in North America increased by 11 percent and international revenues declined by 4 percent. Within international markets, growth in China and Brazil was offset by weaker demand in India, Australia and Europe.
Earnings before interest and taxes (EBIT) were $536 million or 12.6 percent of sales, compared to $496 million or 12.0 percent of sales a year ago.
Net income attributable to Cummins in the third quarter was $355 million ($1.90 per diluted share), compared to $352 million ($1.86 per diluted share) in the third quarter of 2012.
“The Company increased gross margins in the third quarter primarily due to the benefits of our cost reduction initiatives. Material cost savings, productivity gains and lower warranty expenses all contributed to the improvement,” said Tom Linebarger, Chairman and CEO. “Revenues were below our expectations as we continue to face an environment of weak demand for capital goods in most of our major markets. Our focus on lowering costs in all parts of our business positions us well to deliver strong earnings growth as market conditions improve.”
Based on the current forecast, the Company expects full year revenues to be down 3 percent compared to 2012 and EBIT to be in the range of 12.5 to 13 percent of sales. Previously the Company expected revenues to be flat compared to 2012 and EBIT to be in the range of 13 to 14 percent.
Recent highlights include:
The Company issued $1 billion of debt, consisting of $500 million of 3.65% senior unsecured notes due in 2023 and $500 million of 4.875% senior unsecured notes due in 2043
Cummins leaders shared their five-year plans for profitable growth with analysts and investors, including expected revenues of between $25 and $31 billion and EBIT in the range of 16 to 18 percent by 2018
The Company announced plans to acquire the remaining interest in its North American distributors, principally over the next three to five years
Cummins made the Dow Jones Sustainability Indices for the 9th consecutive year and was recognized for the strides it has made in decreasing energy use
Nissan announced plans to offer the Cummins 5.0 L V8 Turbo Diesel engine in its next generation Titan pickup truck
The Company received its best score ever on greenhouse gas reduction from CDP, formerly known as the Carbon Disclosure Project
Third quarter detail (all comparisons to same period in 2012)
Engine Segment
Sales – $2.5 billion, down 1 percent
Segment EBIT – $272 million, or 10.9 percent of sales, compared to $239 million or 9.5 percent of sales
Lower demand in global mining, stationary power and the light duty on-highway market in the US were the most significant drivers of the lower revenues
Demand increased for medium duty truck engines in North America and Brazil
Components
Sales – $1.1 billion, an increase of 14 percent
Segment EBIT – $132 million, or 12.3 percent of sales, compared to $89 million or 9.5 percent of sales
Higher revenues primarily related to higher on-highway demand in North America, Europe and China
Power Generation
Sales – $712 million, down 13 percent
Segment EBIT – $45 million, or 6.3 percent of sales, compared to $73 million or 9.0 percent of sales
Weaker demand in most international markets, particularly Europe and India, offsetting stronger revenues in North America
Distribution
Sales – $944 million, up 2% excluding acquisitions
Segment EBIT – $86 million, or 9.1 percent of sales, compared to $99 million or 12.4 percent of sales
Higher power generation and parts sales in North America offset by lower sales in South Pacific and China
About Cummins
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 46,000 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 6,500 dealer locations. Cummins earned $1.65 billion on sales of $17.3 billion in 2012. 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.