Cummins posted $4.3 billion in third-quarter revenues, a 4-percent jump compared to the third quarter of 2012, with North American revenues leaping 11 percent, while international revenues declined by 4 percent. Within international markets, growth in China and Brazil was offset by weaker demand in India, Australia and Europe.
EBIT was $536 million or 12.6 percent of sales, compared to $496 million or 12 percent of sales a year ago, an 8.1-percent increase. Net income attributable to Cummins in the third quarter was $355 million compared to $352 million in the third quarter a year ago.
“The company increased gross margins in the third quarter primarily due to the benefits of our cost-reduction initiatives,” said Tom Linebarger, chairman and CEO. “Material cost savings, productivity gains and lower warranty expenses all contributed to the improvement. 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, Cummins expects full-year revenues to decline 3 percent compared to 2012, with EBIT in the range of 12.5 to 13 percent of sales.
Cummins leaders recently shared five-year plans for profitable growth with analysts and investors, including expected revenues of between $25 billion and $31 billion, and EBIT in the range of 16 to 18 percent by 2018. Cummins also announced plans to acquire the remaining interest in its North American distributors during the next three to five years.
On the environmental front, Cummins made the Dow Jones Sustainability Index for the ninth consecutive year and was recognized for its improvement in decreasing energy use. Cummins received its best score ever on greenhouse gas reduction from CDP, formerly known as the Carbon Disclosure Project.
Cummins Components segment increased revenue 14 percent and Distribution increased 2 percent, while Engines dropped 1 percent and Power Generation 13 percent. The improvement in the Components segment was primarily related to higher on-highway demand in North America, Europe and China, while the decrease in the Power Generation segment was primarily the result of weaker demand in international markets, particularly Europe and India, offsetting strong revenues in North America.
Cummins is headquartered in Columbus, Ind.