Columbus-based Cummins Inc. (NYSE: CMI) is reporting full-year net income of $1.65 billion, compared to nearly $1.5 billion in 2013. The company says record revenues and improved performance in North America contributed to the increase. February 5, 2015
COLUMBUS, Ind. – Cummins Inc. (NYSE: CMI) today reported results for the fourth quarter and full year of 2014.
Fourth quarter revenue of $5.1 billion, increased 11 percent from the same quarter in 2013. The year-over-year increase was driven by higher revenues in North America which more than offset lower demand in Brazil and Europe.
Earnings before interest and taxes (EBIT) were $629 million for the fourth quarter or 12.4 percent of sales. These results include $32 million of expense associated with cost reduction activities in the Power Generation business. Excluding this expense, EBIT was $661 million or 13.0 percent of sales. This compares to $566 million or 12.3 percent of sales a year ago.
Net income attributable to Cummins in the fourth quarter was $444 million ($2.44 per diluted share), or $465 million ($2.56 per diluted share) excluding one-time items, compared to $432 million ($2.32 per diluted share) in the fourth quarter of 2013.
Revenues for the full year were a record $19.2 billion, 11 percent higher than 2013. Acquisitions contributed 3 percent to revenue growth. Revenues in North America increased 20 percent and international sales grew 2 percent. Within international markets, growth in China more than offset weaker demand in Brazil and India.
EBIT for the year was $2.5 billion or 13.0 percent of sales. Excluding one-time items, EBIT was $2.53 billion or 13.2 percent compared to $2.16 billion or 12.5 percent of sales in 2013.
Net income attributable to Cummins for the full year was $1.65 billion ($9.02 per diluted share), or $1.67 billion ($9.13 per diluted share) excluding one-time items, up from $1.48 billion ($7.91 per diluted share) in 2013. The full year tax rate was 28.7 percent.
“We reported record revenues in 2014 despite weak economic conditions in several of our most important international markets,” said Chairman and CEO Tom Linebarger. “Revenues grew 11 percent as demand in on-highway markets in North America improved, we continued executing our distributor acquisition strategy, and we delivered strong growth in China driven by new products. We continued to invest in future growth, reflecting our commitment to technology and product leadership, while growing EBIT faster than sales.”
Cummins' improvement in profitability was driven by record performance in the Components and Distribution businesses and higher earnings in the Engine business. Results in the Company's Power Generation business fell short of expectations, but the actions the Company has taken to lower costs will improve earnings going forward. Demand in North American on-highway markets is expected to improve again in 2015, but will be partially offset by continued weakness in international markets and the negative impact of the strong U.S. dollar.
Linebarger continued, “We are committed to improving the quality of our products and service for our customers, closely managing costs and further improving our financial performance in 2015. The Company delivered on its commitment to return 50 percent of cash from operations to shareholders in 2014 and will do so again this year.”
Based on the current forecast, Cummins expects full year revenues to grow between 2 and 4 percent, and EBIT to be in the range of 13.5 to 14.0 percent.
The Company increased its dividend by 25 percent and repurchased 4.8 million shares
The Company received credit rating upgrades from Standard & Poor's and Moody's
For the seventh consecutive year, Cummins was named one of the world's most ethical companies by The Ethisphere Institute
Cummins received a perfect score in the Corporate Equality Index by the Human Rights Campaign for the 10th consecutive year
The Company was ranked among the World's Best in Newsweek's 2014 Green Rankings
Cummins was named one of the Top 50 companies for diversity by Diversity Inc for the seventh consecutive year
Fourth quarter 2014 detail (all comparisons to same period in 2013)
Q4 Sales – $2.8 billion, up 11 percent
Q4 Segment EBIT – $315 million, or 11.1 percent of sales, compared to $235 million or 9.2 percent of sales
Strong demand in on-highway markets in North America more than offset weakness in Brazil, China and Europe
Full year sales $11 billion, up 9 percent, EBIT of $1.23 billion compared to $1.04 billion in 2013
Q4 Sales – $1.3 billion, up 16 percent
Q4 Segment EBIT – $160 million, or 12.1 percent of sales, compared to $140 million or 12.3 percent of sales
Higher demand in on-highway markets in North America, Europe and China
Full year sales $5.1 billion, up 18 percent, EBIT of $684 million compared to $527 million in 2013
Power Generation Segment
Q4 Sales – $760 million, flat compared to 2013
Q4 Segment EBIT – $22 million, or 2.9 percent of sales, compared to $46 million or 6.1 percent of sales. EBIT in the fourth quarter of 2014 includes expense of $32 million associated with cost reduction activities
Higher revenues in Latin America and Africa offset weaker demand in Eastern Europe and India
Full year sales $2.9 billion, down 4 percent, EBIT of $168 million compared to $218 million in 2013
Q4 Sales – $1.7 billion, up 58 percent, up 7 percent excluding acquisitions
Q4 Segment EBIT – $158 million, or 9.3 percent of sales, compared to $107 million or 10.0 percent of sales
Current quarter included gains of $35 million, and amortization costs of $17 million related to acquisitions
Higher revenues were primarily driven by acquisitions and stronger demand for parts and service in North America
Full year sales $5.2 billion, up 38 percent, EBIT of $491 million compared to $388 million in 2013
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 54,600 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 7,200 dealer locations. Cummins earned $1.65 billion on sales of $19.2 billion in 2014. 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.