Columbus, Ind.-based Cummins Inc. today reported record sales, profits and cash flow from operations for all of 2011 as well as strong results for the fourth quarter.
Fourth-quarter revenue of $4.9 billion increased 19% from the same quarter in 2010 and set a new quarterly record for the diesel engine builder. The increase year-over-year was driven by higher demand in truck, construction, power generation and oil and gas markets in North America. The company also experienced strong growth in global mining markets. Growth in these markets offset weaker demand in the construction market in China and power generation in India.
Fourth-quarter net income jumped to $548 million, or $2.86 a share, from $362 million, or $1.84 a share, a year earlier. Excluding some items, profit was $2.56 a share, compared with $2.24.
Earnings before interest and taxes (EBIT) was $768 million for the fourth quarter. Excluding special items, EBIT was $677 million or 13.8% of sales, representing a 25% growth in earnings year-over-year.
Revenue for the full year was $18 billion, up 36% from 2010, with strong growth in most geographic regions.
Net income attributable to Cummins for the full year was $1.85 billion ($9.55 per diluted share), up from $1.04 billion ($5.28 per diluted share) in 2010. EBIT for the year, excluding special items, was $2.56 billion or 14.2% of sales, compared to $1.66 billion or 12.5% of sales in 2010.
“Cummins had its best year ever in 2011, despite economic uncertainty in a number of regions. We continue to benefit from our leading position in a number of end markets and geographies,” said Tom Linebarger, chairman and CEO. “Revenue in the United States grew 53% and international revenue grew 27% year-over-year. In fact, we experienced record full-year revenues in North America, Brazil, China, India and a number of other important markets.”
Based on the current forecast, Cummins anticipates that total revenues will increase 10% in 2012, with EBIT in the range of 14.5% to 15% of sales.
“Our 2011 results and our forecast for 2012 reaffirms our confidence in reaching our goal of achieving $30 billion in sales and 18% EBIT in 2015,” Linebarger said.
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Engine maker Cummins Inc. is finding that going green can be profitable, according to an Associated Press report.
Cummins has invested about $10 million in 70 projects in its Indiana facilities since 2007, leading to annual savings of $4 million. Throughout the company, a total investment of about $28 million is providing annual savings of $20 million corporate-wide.
Energy and environmental relations Director Laurie Counsel says few initiatives undertaken by Cummins have produced a better return on investment.
Cummins recently became a partner in the U.S. Department of Energy’s Better Buildings, Better Plants Challenge. That program requires participants to achieve an energy-reduction goal. Cummins is shooting for a 25% reduction by 2015.
Every Thursday for two months, Chen Yang would take a two-hour break from work. But, according to a report in China Daily USA, it wasn’t for lunch, but to teach a Chinese language course to about 30 fellow American colleagues at Cummins Inc., an engine maker located in Columbus, Ind.
“In the beginning, they could only say ni hao (“how are you” in Mandarin). But now they are able to look at the pinyin and pronounce each word perfectly. That was really rewarding,” says Chen, who works as a global emissions compliance analyst at Cummins.
Native-speaking employees, such as Chen, volunteer their services to the Cummins Chinese Affinity Group (CCAG) to teach a series of Chinese language classes, which take place over a six-week period twice a year. The organization, which has about 300 active members, aims to promote and cultivate interest in the Chinese culture at Cummins. A total of 80 non-Chinese employees signed up for the language classes this year.
The course teaches more than pronunciation. It aims to instill an appreciation for Chinese food and tea, and to show participants how to greet a Chinese person when you meet him or her for the first time.
For a long time, Cummins has infused a strong Chinese presence in Columbus. The company, in conjunction with the Columbus Chinese Association, hosts an annual Chinese New Year party for its employees as well as Columbus residents. The mayor of Columbus, Fred Armstrong, attends the event every year.
The Fortune 500 company employs 16,000 people in the United States, most of them in Columbus. Its large presence in China – 9,000 employees – shows its devotion to its business overseas.
China is, after all, Cummins’ second-largest market after the US, representing 15% to 20% of the company’s business. The company’s revenue in China is expected to be 3.8 billion yuan ($596.8 million) this year and is expected to grow rapidly year-on-year.
“China is becoming a more and more important part of our business. Every week, we have our Chinese customers visiting us in Columbus. Last week, we had a visit from Beiqi Foton Motor, Dongfeng Motor and LiuGong Machinery were here, too,” says Edmund Yu, who is the director of international marketing and also head of CCAG at Cummins.
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Elkhart, Ind., Mayor Dick Moore announced today the city is a recipient of the 2011 Cummins Environmental Challenge Grant.
According to a press release, the $10,000 check was presented to Moore by Kathy Rosebrook, senior process engineer at Cummins Onan Corp. in Elkhart. The grant will be used to make additional improvements to the former LaBour Pump brownfield on Sterling Avenue.
The property was historically an industrial manufacturing facility and closed its operations in 2005. Since that closing until July 2010 the property had been abandoned and was not only a deteriorating eyesore but also a public nuisance.
In July 2010 the City of Elkhart had the property razed and environmentally remediated in accordance with Environmental Protection Agency (EPA) action plans. Potential uses for this very narrow strip of land were quite limited in scope. The City of Elkhart decided to transform this former brownfield site within the city’s industrial corridor into a self-sustaining environmental park.
Preliminary plans include raised bed gardens, a walking/biking path, and a greenhouse with community access. Future plans include renewable energy sources placed within the park such as wind and solar.
Cummins Inc. said it views the LaBour Pump project as a platform to increase their employees’ involvement and positively impact the community.
“This grant demonstrates Cummins’ long-standing commitment to the communities where its operations are located,” said Mayor Moore. “It is through gifts such as this that the city is able to make the improvements that are needed without putting additional strain on the city’s budget. I am proud and humbled by the dedication of our corporate partners and their employees that continue to demonstrate a desire to improve the community where they live, work, and play.”
After achieving significant energy efficiency and greenhouse gas (GHG) reductions over the last five years, Cummins Inc. is now “raising the bar on its efforts by becoming a Partner in the Better Buildings, Better Plants Challenge.”
According to a press release, President Obama recently announced the challenge. The criteria for being a Challenge Partner in the U.S. Department of Energy’s program include reducing energy use by at least 25% per dollar revenue from 2005-2015, committing to complete a larger-scale energy efficiency project and reporting details on energy use and progress.
Cummins joined the U.S. Environmental Protection Agency’s Climate Leaders Program in 2006 and set the goal of a 25% reduction of GHG emissions per dollar revenue from 2005 to 2010. In May 2011, the company announced that it had exceeded the goal with a 28% reduction.
In becoming a Partner in the Better Buildings, Better Plants Challenge, Cummins will be building on this effort as approximately half of that 28% GHG reduction came as a result of energy efficiency improvements. The company’s new 25% energy efficiency goal over the 2005 to 2015 timeframe is equivalent to about a 40% GHG reduction.
“Cummins strongly believes in the business case for energy efficiency,” said Tom Linebarger, Cummins president and COO. “It is good business, good for our business, and it is the right thing to do. By being a Challenge Partner, Cummins commits to aggressively pursue energy efficiency, which will continue to move our work forward. The Challenge also provides a forum to both share our knowledge and learn from fellow Partners that can encourage other companies to pursue energy efficiency actions.”
Columbus, Ind.-based engine maker Cummins Inc. announced today (Nov. 2) that Jim Lyons has been named Vice President — Chief Manufacturing Officer.
“In his new role, Jim has significant responsibilities in helping us achieve our goal to make improvements and savings through the Supply Chain organization,” Lisa Yoder, vice president — Global Supply Chain and Manufacturing, said in a news release.
Lyons will work on improving the company’s worldwide manufacturing performance with an emphasis on successful delivery, schedule stability and attainment, and waste reduction.
“His work will include growing capacity ahead of demand and providing a leadership role in aligning manufacturing, purchasing and supply chain,” Yoder said.
In addition, Lyons will be in charge of Cummins’ Health, Safety and Environmental organization. “Jim has always demonstrated a passion for safety and I am confident that he can lead us to achieve world class safety performance over the next few years,” Yoder said.
Lyons brings to the position 38 years of experience with Cummins, most recently as president of Cummins Turbo Technologies (CTT), where he led that business to a turn-around in performance. He will continue in his CTT role through the end of the year as he works with his replacement to ensure a smooth transition. He will also begin shifting into his new role. Lyons replacement at CTT will be announced soon.
“One vital link in our supply chains is manufacturing and it is important that we have the kind of leadership at the corporate level to accelerate our efforts in operational excellence,” Yoder said. “That is why we are creating the key role of Vice President — Chief Manufacturing Officer for Cummins.”
BorgWarner Inc., the world’s biggest maker of automatic-transmission parts for vehicles, filed a lawsuit accusing Cummins Inc. of infringing three patents for a titanium wheel used in engine turbochargers.
Bloomberg reported that BorgWarner said it has “made considerable investments in improving turbocharger technologies,” and Cummins is using the inventions “with reckless disregard” of BorgWarner’s rights, according to the complaint filed today in federal court in Asheville, N.C.
Turbochargers are used to improve the power and efficiency of smaller engines, and governments are pushing automakers to increase fuel economy in vehicles. BorgWarner in July said its second-quarter profit almost doubled, and the Auburn Hills, Mich.-based company boosted its forecast for revenue and profit for this year because of increased turbocharger sales.
BorgWarner previously sued Honeywell International Inc. over the same patents and settled the case in May for $32.5 million.
Cummins, based in Columbus, Ind., said yesterday (Oct. 26) that sales in its components unit, which includes turbochargers, rose 32% to $1.02 billion. Janet Williams, a spokeswoman for the company, said in a telephone interview that Cummins doesn’t comment on pending litigation.
The compressor wheels at issue in the case direct air to an engine’s intake manifold. BorgWarner’s inventions related to a cost-effective cast titanium compressor wheel, the design of the wheel and a method for making turbochargers with the titanium wheel.
Engine maker Cummins Inc. today (Oct. 25) reported strong sales and earnings for the third quarter. Year-over-year growth was driven by global mining and oil and gas markets, on-highway markets in North America and Brazil, and construction demand in Asia.
Third quarter sales were $4.6 billion, up 36% from the same period last year. All segments delivered double-digit growth over the prior year.
Earnings before interest and taxes (EBIT) were $640 million, or 13.8% of sales, compared to $449 million, or 13.2% of sales, in the same period in 2010.
Net income attributable to Cummins Inc. in the third quarter was $452 million, an increase of 60% from a year ago, or $2.35 per diluted share. This compares to $283 million or $1.44 per diluted the year prior.
“We delivered strong performance in the third quarter and 2011 will be a record year for the company,” said Tom Linebarger, president and COO. “Many of our key markets continue to show strong growth, for example, mining, oil & gas, and North American on-highway markets. However, as discussed at our recent investor conference, there is some uncertainty around the macro-economic environment. Government actions to reduce inflation in India and China have resulted in softer near-term demand than we previously expected. This, along with the recent strengthening of the U.S. dollar, has caused us to slightly soften full year revenue guidance to a range of $17.5 to $18 billion, which would represent an increase of over $4 billion or over 30% compared to 2010.”
The company now expects to deliver record profits of between 14% and 14.5% EBIT, compared to 12.5% in 2010. This guidance excludes gains from the sale of the exhaust and light-duty filtration businesses.
Engine segment sales of $2.96 billion were up 43% compared to the same quarter a year ago. This increase was driven by on-highway markets in North America and Latin America, strong worldwide oil and gas, mining and construction activity. Engine segment EBIT was $349 million, or 11.8% of sales.
Power Generation segment, which includes RV supplier Cummins Onan, had sales of $874 million, a year-over-year increase of 10%. Improvements in China, North America, Europe and the Middle East offset weaker demand in India. Power Generation segment EBIT was $92 million or 10.5 percent of sales.
Components segment sales of $1.02 billion were up 32% year-over-year. All businesses experienced strong growth driven primarily by higher demand in on-highway markets in the US and Europe. Components segment EBIT was $113 million, or 11.1% of sales.
Distribution segment sales were $783 million, an increase of 37% from the third quarter last year. Growth over the prior year was driven by oil and gas markets in North America, power generation demand in Asia, and industrial demand ahead of the Tier 4 emission change in North America and Europe. Distribution segment EBIT was $104 million, or 13.3% of sales.
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Engine builder Cummins Inc. recently announced that it has been named to the Dow Jones Sustainability World Index for the seventh consecutive year.
According to a news release, the index recognizes the top 10% of the world’s largest public companies for their economic, social and environmental performance. Altogether, 342 companies were named to the 2011 World Index across 57 industry sectors.
Cummins was among just 10 U.S. companies in the broader listing of industrial goods and services to make the World Index and one of two U.S. companies named a sustainability leader in the industrial engineering sector. The company was also named to the North America Index for the fifth consecutive year.
Dow Jones, working with SAM, an investment firm focused exclusively on sustainability-related investing, has developed a “best-in-class” approach to analyzing companies across a wide range of sustainability metrics.
Companies are assessed on their performance in areas such as corporate governance, risk management, climate change strategy, environmental management and eco-efficiency, labor practices, corporate citizenship and philanthropy, employee development and supply chain standards. In addition to a universal set of criteria, companies also were analyzed on issues specific to their industries.
“We worked to create a cleaner and healthier environment, build stronger communities and to create the right work environment where the diversity of our employees fuels the innovation our customers count on,” Chairman and Chief Executive Officer Tim Solso said of 2010-2011 in the company’s most recent Sustainability Report.
Columbus, Ind.-based Cummins Inc. needs to add 7,000 engineers within five years, CEO Theodore Solso said Wednesday (Oct. 5) at a Bloomberg Innovation and Jobs Forum in Washington, D.C.
The Indiana Business Journal reported that the maker of diesel and natural gas engines and electric power-generation systems is forecasting a sharp rise in annual sales. Additional reductions in engine pollution and more stringent fuel efficiency rules will dominate engine technology and development for the next 10 years, requiring more engineering resources.
Those engineers will be hired in India, China and Africa as well as in the United States, United Kingdom and Brazil.
The company told analysts last month that its annual sales are forecast to grow by more than 60% and reach $30 billion in 2015. Cummins expects revenue growth to average 14% a year from 2011 to 2015.
Overseas demand and tougher environmental standards for engine emissions are pushing Cummins’ revenues higher, overcoming weak economic growth in several global markets.
“Several of the economies where Cummins operates are clearly weakening,” COO Tom Linebarger told analysts last month. “We really don’t know how deep it will go. We are confident in the long-term profitable growth of the company.”
Company officials said tighter standards for engine exhaust have allowed Cummins to leverage its engineering expertise, particularly in emerging markets where some domestic rivals lack the technical skill to comply with the tougher rules.
The expansion of infrastructure in emerging economies such as South America, China and India is driving demand for Cummins’s engines used in construction equipment, commercial trucks, and power generators.
The company’s engine shipments are also being helped by expanded output of oil, natural gas and mined commodities, executives told analysts.