Cummins Sales and Earnings Surge on Strong Global Demand Across All Business Segments
Cummins Inc. has reported
significantly higher revenues, net income and Earnings Before Interest
and Taxes (EBIT) for the first quarter of 2008. All four business
segments reported double-digit percentage sales increases during the
quarter, with earnings growing at an even faster pace than sales.
Sales of $3.47 billion were 23 percent higher than $2.82 billion in
the first quarter 2007, due to a 25 percent increase in both the
company’s engine and components segments, a 44 percent increase in the
distribution business and a 17 percent rise in power generation sales.
Net income rose 33 percent to $190 million, or 97 cents per share,
compared to $143 million, or 71 cents per share, during the same period
in 2007. EBIT of $315 million, or 9.1 percent of sales, was 30 percent
higher than $243 million (8.6 percent of sales) a year ago.
Cummins showed strength across all its business segments, both in
the U.S. and in key international markets. Particularly strong
performance in international markets which accounted for 57 percent
of the company’s sales in the quarter helped offset rising commodity
prices and sluggishness in some U.S. consumer-related markets such as
pickup truck engines, recreational vehicle products and recreational
“Our strong performance in the first quarter, which came in the
face of considerable economic uncertainty in the U.S., is further proof
that our diversification and growth strategies are working,” said
Cummins Chairman and Chief Executive Officer Tim Solso. “While we are
monitoring the U.S. economy closely, we intend to continue investing in
opportunities around the world to fuel further growth in the future.”
Based on the company’s performance in the first quarter and the
outlook for the remainder of the year, Cummins affirmed its previous
forecasts for revenues to grow by at least 12 percent from 2007 and
that it expects to achieve its EBIT target of 10 percent of sales for
the full year.
The company also reiterated its plans to invest between $550 and
$600 million in capital expenditures globally, mostly to fund new
product initiatives and to create product capacity in a multitude of
global markets where emissions standards are changing.
First-quarter demand was particularly strong for medium-duty truck
engines in the United States; for commercial generator sets in India,
the United Kingdom, Asia and the Middle East; and for turbochargers and
exhaust aftertreatment products in North America and Europe. In
addition, the company’s distribution business saw considerable growth
in Europe, the Middle East and Asia Pacific.
In addition, the company’s joint venture earnings increased 86
percent from the same period in 2007. The improvement was primarily
driven by strength in emerging markets such as China and India, and at
the company’s North American distributors.
Sales growth was led by the engine business, the company’s largest
business segment. Heavy duty and medium duty truck engine shipments
increased 36 percent and 68 percent, respectively, primarily due to
increased market share in North America.
Through February, the latest month for which statistics are
available, Cummins owned a market-leading share of 43 percent of the
North American Class 8 truck engine market compared to 28 percent at
the same time last year. Cummins’ share of the Class 7 medium-duty
truck market was 55 percent through February, compared to 23 percent at
the same time in 2007.
As another sign of the company’s strong financial performance,
Standard & Poor’s upgraded Cummins’ investment-grade debt rating to
‘BBB' from 'BBB-' in March. In its announcement of the upgrade, the
agency cited “improved operating performance over the past several
years -- including during the expected emissions-related downturn in
(North American) heavy-duty truck demand in 2007 -- combined with
significant on- and off-balance-sheet debt reduction, reflective of
moderate financial policies."
For more information about Cummins, go to: www.cummins.com.