Columbus, Ind.-based Cummins Inc. last week reported higher sales and significantly improved profits in the first quarter compared to the same period in 2009. The gains came on the strength of the company’s performance in key international markets, and cost reductions and productivity gains in manufacturing facilities across the company. Sales of $2.48 billion rose 2 percent from $2.44 billion in the first quarter in 2009, as growth in the company’s Components and Distribution segments slightly more than offset declines in the Engine and Power Generation segments.
Net income attributable to Cummins Inc. increased to $149 million, or $0.75 a share, from $7 million, or $0.04 a share, during the same period in 2009. Earnings Before Interest and Taxes rose to $266 million, or 10.7 percent of sales, compared to the $94 million, or 3.9 percent of sales a year ago, which excluded restructuring charges.
Compared to the fourth quarter of 2009, sales were down 27 percent because of lower demand in North America, but EBIT remained strong at 10.7 percent of sales, compared to the 11.4 percent reported last quarter, which excluded restructuring charges.
Three of the company’s four business segments reported improved profits compared to the first quarter of 2009, with only the later-cycle Power Generation business reporting a decline. The company’s operational improvements were most evident in the Engine and Components segments, where gross margins and EBIT improved significantly, while the Distribution segment continued its strong performance.
“Our strength in large developing markets such as China, India and Brazil has given us a significant boost as those economies have continued to recover from the recession more quickly than other regions,” said Cummins chairman and CEO Tim Solso.
Based on the first-quarter results and its forecast for the remainder of the year, the company increased its sales and EBIT guidance for 2010. The company now expects sales to be $12 billion and to earn an EBIT margin of 10 percent of sales.
The company also expects to generate positive cash flow in 2010 and is forecasting capital spending of approximately $400 million for the year, an increase of nearly 30 percent from 2009, to fund projects critical to the company’s long-term growth.
“Our employees worldwide have done outstanding work, which is reflected in our strong first-quarter results, but our priorities for the year have not changed,” said Tom Linebarger, Cummins president and chief operating officer. “We remain focused on managing the business conservatively so that we can earn a solid profit for the duration of the global downturn and position the company for strong profitable growth in all markets as the economy recovers.”
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.
