Engine and generator maker Cummins posted first quarter revenues of $4.3 billion, a 9 percent decrease compared to the first quarter of 2015. Lower production in the North American heavy-duty truck market and weak global demand for off-highway and power generation equipment contributed to the reduction in sales. Currency negatively impacted revenues by about 3 percent compared to last year, the company said, primarily because of a strong U.S. dollar.
Revenues in North America dropped 10 percent while international sales declined 10 percent. Within international markets, revenues in Latin America and Asia declined the most.
Earnings before interest and taxes in the first quarter were $484 million, or 11.3 percent of sales, down from $562 million or 11.0 percent of sales the previous year.
“Our results for the first quarter reflect solid execution of our cost reduction plans
in the face of very challenging market conditions,” said Rich Freeland, chief operating officer. “Benefits from restructuring actions, material cost reduction projects and lower warranty costs all helped to mitigate the impact of lower sales.”
Based on the current forecast, Cummins expects full year 2016 revenues to decline 5 to 9 percent, and EBIT to be in the range of 11.6 to 12.2 percent of sales.
Cummins reorganized its business to combine its Power Generation segment with its High Horsepower engine business, creating the new Power Systems segment. From now on, Cummins will present results for four operating segments: Engine, Distribution, Components and Power Systems.
“The formation of the Power Systems segment combines two businesses that are already strongly interdependent and will allow us to streamline business and technical processes to accelerate innovation, grow market share and more efficiently manage our supply chain and manufacturing operations,” said chairman and CEO Tom Linebarger.
During the quarter, Cummins’ QSK95 diesel engine received Tier 4 Final certification from the ERPA for the U.S. locomotive market. Also the company announced a joint venture with Olayan to expand access to markets and enhance the service and support provided to customers in the Middle East.
