Columbus, Ind.-based diesel engine manufacturer Cummins Inc. lowered its previously reported quarterly profit by $12 million, or 3.1%, after discovering legal fees that the company initially missed.
Indianapolis Business Journal reported that Cummins announced Wednesday (Feb. 20) that it actually finished its fourth quarter with a $369 million profit, or $1.95 per diluted share. The company reported Feb. 6 that it earned $381 million in the period ended Dec. 31.
Earnings before interest and taxes dropped by $20 million, to $532 million. Earnings for all of 2012 fell to $1.65 billion, or $8.67 per share, from $1.85 billion, or $9.55 per share, in 2011.
The company adjusted its earnings to reflect an increase to its legal reserves after a “recent adverse court ruling” for a contract dispute.
Engine builder Cummins Inc.’s fourth-quarter earnings sank 30% as the heavy-duty truck engine maker saw sales in most of its segments decline, led by its core engines business.
As reported by MarketWatch.com, the Columbus, Ind.-based company reported a profit of $381 million, or $2.02 a share, down from $548 million, or $2.86 a share, a year earlier. The year-earlier period included benefits of 17 cents a share from asset sales and 13 cents from flood insurance recoveries. Excluding those items, restructuring costs and other items, per-share earnings were down to $2 from $2.56.
Revenue dropped 13% to $4.3 billion while gross margins narrowed to 24.7% from 25.2%.
In the engine segment — the largest contributor to the top line — fourth-quarter sales slipped 18% to $2.51 billion. Components sales fell 14% and power generation sales sank 17%. Distribution sales were up 8.8%.
Sales for the full year were $17.3 billion, down 4% from 2011. Net income for the full year was $1.66 billion, or $8.74 per diluted share, down from $1.85 billion, or $9.55 per diluted share in 2011.
The company blamed the fourth-quarter revenue decline on weaker demand in truck, construction, and oil and gas markets in North America, as well as lower demand in international markets for power generation equipment and construction, truck and mining engines.
“After a strong start to the year, demand declined across most geographies and end markets in the second half of 2012 as the global economy slowed,” CEO Tom Linebarger said. “The work we have undertaken to reduce costs and lower inventory should benefit the company when the global economy improves, however there is uncertainty surrounding the timing and pace of improvement in end markets in 2013.”
The company said Wednesday (Feb. 6) it has cut its work force by about 650 employees, or 3%, while also eliminating about hourly 650 positions.
For the new year, the company forecast revenue to be flat to down 5%, compared with estimates of a 2% rise from analysts polled by Thomson Reuters.
Cummins recently unveiled cost-cutting measures as it said a weakening global economy was driving down demand for its engines. The company has described a particularly sharp contraction in the North American commercial truck market — where Cummins is the largest supplier of engines for heavy-duty trucks — saying trucking companies have been throttling back on their purchases because of uncertainty about freight volumes and the strength of the U.S. economy.
Cummins also continues to experience weaker-than-anticipated demand from manufacturers of construction machinery, trucks and power generation equipment in China.
Navistar RV, a subsidiary of Navistar International Corp., announced that it will now offer the Cummins ISX15 engine on certain recreational vehicle coaches. According to a press release, the new engine option is a result of an engine supply agreement signed recently between Navistar RV and distributor Cummins Crosspoint LLC.
“The ISX15 is one of the most popular heavy-duty engines in North America, and we are delighted to add it to our power portfolio,” said Bill Osborne, president, Navistar RV. “These big-bore engines will allow us to offer high-end diesel products with more horsepower, meaning we can introduce larger vehicles with unprecedented levels of luxury and performance.”
Highly adaptable to a wide variety of needs, the ISX15 is available for RV applications with 550 and 600 horsepower ratings and up to 1950 lb. ft. of torque. Its fuel system delivers maximum performance, regardless of engine RPMs, and multiple injection events improve fuel efficiency and enable a smoother, quieter ride. With a standard engine brake and impressive power, the ISX15 is a proven and compliant engine for RV usage.
The release of the first Navistar RV with the Cummins ISX15 engine is timed for dealer debut later this year.
“We had a limited amount of ISX engines that we used to build some previous Monaco coaches, and those were the best retail turns we’ve ever had in the field,” said Mike Snell, vice president sales, Navistar RV. “That reaction demonstrates a true sign of demand, and we expect our new ISX-powered vehicles to help us create a new level of high-end diesel units for the brand.”
Navistar International Corp. today (Dec. 17) announced it is shipping its first 300 International ProStar+ Class 8 on-highway tractors equipped with the Cummins ISX15, according to a press release.
“Reaching its ‘OK-to-Ship’ milestone on Dec. 14 – five days ahead of schedule – demonstrates the tremendous progress we’re making in delivering our first SCR-based Class 8 trucks to the marketplace,” said Troy Clarke, Navistar president and COO. “Working collaboratively and fully integrated with our Cummins colleagues, the team has beat an aggressive launch timeline while ensuring the highest levels of quality.”
The International ProStar+ with MaxxForce 13 and Cummins Emission Solutions SCR-based after-treatment system is on-track for initial pilot production in March 2013 with regular production to begin in April 2013.
The remaining lineup of heavy-duty truck models will transition to SCR-based clean engine technology in a phased launch throughout 2013 based on volume and customer demand.
Cummins Inc. announced that its board has authorized the company to repurchase up to $1 billion in shares of common stock.
According to a press release, the program was approved as the engine maker approaches completion of its current $1 billion share repurchase program approved by the board in February 2011.
“The announcement of this new repurchase program reinforces our commitment to returning value to shareholders and follows a 25% increase in the dividend announced in July,” said Cummins Chairman and CEO Tom Linebarger. “We continue to have confidence in the company’s future performance and our strong balance sheet allows us the flexibility to fund future growth and to continue to reward shareholders.”
Cummins Inc. is eager to bring a light-duty diesel engine to the U.S. market and is looking for an automaker that would commit to buy the engine to install in smaller pickups and SUVs – a key tow vehicle category.
But the Columbus, Ind.-based engine maker won’t say how soon the domestic light-duty diesel engine program could start up. “It could be soon — it could be later. We don’t know at this point. Nothing’s imminent,” said Jon Mills, a Cummins spokesman. “We’re continuing to talk to potential partners.”
The Indianapolis Star reported that Mills noted any decision on moving ahead on a light-duty diesel “would depend on what partner we got.”
Cummins’ search for a buyer for a light-duty diesel comes as it prepares to celebrate the 2 millionth mid-range diesel engine it’s produced for Dodge Ram pickups. Production of that mid-range engine began in 1988 (sized then at 5.9 liters) and the 2 millionth (now 6.7 liters) will roll off a Cummins’ production line in Columbus next month.
Cummins produces a small 2.8 liter diesel engine in China and Australia, but the lightest-duty diesel it makes for U.S. use is the one for Ram, said Mills.
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Navistar International Corp. announced that the first heavy-duty highway rig equipped with a less-polluting Cummins Inc. engine came off the production line this week at Navistar’s plant in Mexico.
Chicago Crains Business reported that this is a milestone for Lisle-based Navistar, which was unable to produce a diesel engine that meets tighter emissions standards.
In a statement, the company said the teams at Navistar and Cummins have been “laser-focused” on a seamless implementation of the launch plan.
“This is a great accomplishment for Navistar and an important milestone as we bring our first SCR-based Class 8 trucks to the marketplace,” Navistar President and COO Troy Clarke said in a statement. “The entire launch team and hundreds of others working behind the scenes are committed to a high-quality launch, and this achievement is another proof point in our progress.”
In August, after a three-year struggle, Navistar abandoned its technology and said it would purchase engines from Columbus, Ind.-based Cummins. The failure led to the ousting of CEO Dan Ustian, who had led the failed engine development.
Navistar is recovering, said interim CEO and Executive Chairman Lewis Campbell. “We have the right plan and strategy in place to turn this company around in the next 12 to 18 months,” Campbell said recently during a session at the Baird Industrial Conference in Chicago.
The company said a smaller Navistar engine will enter initial pilot production in March with regular production beginning in April.
Layoff notices were delivered to some members of the professional staff at Columbus-based Cummins Inc. this week, affecting white-collar workers in the engine maker’s corporate headquarters for the first time since a move to trim the global workforce was announced five weeks ago.
“These things are literally happening department by department as the company works through projects and priorities,” Jon Mills, Cummins director of external communications, said Tuesday.
According to a report by The Republic, Mills said Cummins employees should know the full extent of the layoffs and who is affected by mid-December. He said there would not be external announcements each time a reduction is made.
Cummins announced Oct. 9 that it would trim 1,000 to 1,500 jobs by year’s end from its 47,000-member worldwide workforce to cope with weaker-than-expected sales and a slowdown in the world economy. The timing of that workforce announcement coincided with a revised sales forecast of $17 billion for the year, which is $1 billion lower than what was estimated in July.
Then on Oct. 17, the engine maker specified that about 150 workers — at least one-tenth of the total global workforce reduction — would be laid off from among its three southern Indiana plants, the Fuel Systems Plant in Columbus, the Columbus MidRange Engine Plant and the Seymour Engine plant. As part of that announcement, Cummins said it also expected 126 workers would be transferred to the MidRange Engine Plant.
Cummins currently has about 7,700 employees in southern Indiana.
Cummins Inc.’s third-quarter earnings fell 22% as the Columbus, Ind.-based engine maker reported that revenue declines in its international markets offset modest growth in North America.
Earlier this month, Cummins trimmed its sales and profit guidance and unveiled cost-cutting measures as it said a weakening global economy was driving down demand for the company’s engines. The company, which is a major supplier to the motorhome sector, said the slowdown is particularly acute in the North America commercial truck market where Cummins is the largest supplier of engines for heavy-duty trucks.
Cummins also reported deteriorating market conditions in China, the global mining industry and the international market for power-generating engines.
“Demand has dropped sharply over the last three months, reflecting a high degree of uncertainty among customers in most geographic markets,” Chairman and CEO Tom Linebarger said Wednesday (Oct. 31). “We have been responding to the conditions by delaying or canceling projects, flexing production at some of our manufacturing plants, reducing discretionary expenses, and reducing our workforce by 1,000 to 1,500 people by the end of this year.”
Cummins reported a profit of $352 million, or $1.86 a share, down from $452 million, or $2.35 a share, a year earlier. Excluding items such as tax adjustments, earnings were down at $1.78 from $2.20. Analysts recently projected $1.83.
Revenue decreased 11% to $4.1 billion, in line with the company’s recent downbeat forecast. Sales rose 2% in North America, but declined 21% in its international markets.
Gross margin eased to 25.3% from 25.7%.
In the engine segment — the largest contributor to the top line — sales dropped 14% to $2.5 billion.
Engine builder Cummins Inc. today (Oct. 24) announced that it is ranked No. 64 among the 500 largest public companies in the United States and No. 1 among industrial companies in Newsweek’s 2012 Green Rankings of businesses.
“This recognition by Newsweek demonstrates Cummins commitment to a key element of our corporate mission – demanding that everything we do leads to a cleaner, healthier, safer environment,” said John Wall, vice president and chief technical officer for Cummins. “Cummins is constantly looking for new and innovative ways to improve the environment and the communities where we live and work, while producing industry-leading products for our customers. Environmental stewardship is a real and important component of business leadership.”
The Newsweek methodology compares the actual environmental footprints, management (policies, programs, initiatives, controversies) and reporting practices of big companies. Newsweek teamed with leading environmental research providers, Trucost and Sustainalytics, to gather and analyze the data.