Cummins Inc. last week reported significantly higher revenues, net income and Earnings Before Interest and Taxes 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 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 $0.97 per share, compared to $143 million, or $0.71 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.
“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 CEO 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.
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.”
Cummins Inc., a global power leader, 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. Headquartered inColumbus,Ind., Cummins serves customers in approximately 190 countries and territories through a network of more than 500 company-owned and independent distributor locations and approximately 5,200 dealer locations.