Cummins CEO: ‘Challenging Economic Conditions’ Persist

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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 $289 million, a drop from $380 million in the same quarter a year ago. Chief Executive Officer Tom Linebarger says performance continues to be affected by slow global economic growth and weak demand in key markets.
The engine manufacturer says quarterly revenues dipped 9 percent to $4.2 billion, citing lower truck production and less demand internationally for its power generation equipment. Other concerns include a stronger U.S. dollar, which caused a 2 percent decrease in revenue. Higher revenue in China, says Cummins, partially offset drops in North America, the Middle East and Africa.
Linebarger says "the restructuring actions that we initiated in the fourth quarter of 2015, combined with strong execution on material cost reduction initiatives, productivity gains and improvements in product quality are all helping to mitigate the impact of weaker revenues. We are on track to deliver our goal of 25 percent decremental EBIT margin for the full year 2016, as a result of strong operational performance in very challenging economic conditions. We have returned $1.3 billion to shareholders so far this year, through a combination of dividends and share repurchases, consistent with our plans to return 75 percent of operating cash flow to shareholders in 2016."
Full-year 2016 revenues are expected to be off by 9 percent, which Cummins says is consistent with previous guidance.
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