Despite the current global recession, Cummins Inc. is taking aggressive actions to ensure that its long-term profitable growth resumes once the economic recovery begins, its chairman and CEO Tim Solso told shareholders last week at the company’s annual meeting.
Speaking from the Columbus Engine Plant, Solso told shareholders that Cummins is preparing for little or no global economic growth through the end of 2010, but that the company expects to remain profitable and generate positive cash flow throughout the recession.
“We have reacted more quickly and decisively in this recession than in any of the previous five recessions I have experienced in my nearly 40 years at Cummins,” Solso said. “We entered this recession in the best financial shape in our history, and our actions to reduce costs, manage our cash and invest strategically in key future products give us confidence that we will emerge a stronger company.”
Solso reaffirmed that Cummins expects its sales to decrease slightly more than 30 percent this year from 2008. Earnings Before Interest and Taxes are expected to be approximately 5 percent of sales, excluding restructuring charges associated with workforce reductions announced early this year.
Solso said Cummins’ priorities for managing through the recession are to align costs and manufacturing capacity with the real demand for its products; to manage cash to ensure positive cash flow; and to continue to make key strategic investments in technology, especially investments associated with the company’s 2010 product launch in North America.
“We are planning for this recession to be broader, deeper and longer than any we have seen in the past, but we remain confident in the future prospects for the company,” Solso said. “Our technical leadership, global footprint and the long-range trends around energy availability, environmental regulations and global infrastructure development all play to our strengths.”
Solso also recognized former Cummins vice chairman Joe Loughrey for his contributions to Cummins. Loughrey retired in March after more than 35 years with the company.
Headquartered in Columbus, Ind., Cummins Inc. is a corporation of complementary business units that design, manufacture, distribute and service engines and related technologies, including fuel systems, controls, air handling, filtration, emission solutions and electrical power generation systems.