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.
For the full report click here.
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.
Cummins Inc. predicted Tuesday (Sept. 13) that its annual sales will grow by more than 60% to reach $30 billion in 2015, according to a report in the Wall Street Journal.
The commercial-engine maker said it expects overseas demand for its products and tougher standards for engine emissions to drive sales higher, despite sluggish economic growth in several of its geographic markets.
“Several of the economies where Cummins operates are clearly weakening,” said Tom Linebarger, the company’s COO, during a presentation to analysts Tuesday. “We really don’t know how deep it will go. We are confident in the long-term profitable growth of the company.”
To reach the $30 billion goal, Cummins expects revenue growth to average 14% a year from 2011 to 2015. The Columbus, Ind., company anticipates consolidated revenue this year rising 35% from 2010 to $18 billion, putting the company on a course to easily surpass its previous long-range revenue goal of $20 billion in 2014.
Cummins anticipates sales from its engine business will grow by an average of 11% a year from 2011 to 2015, pushing annual engine segment sales to $17 billion. In its power generation business, the company expects sales growth to average 15% a year, sending sales to $6.2 billion in 2015.
Cummins also increased its pre-tax profit margin target to 18% of sales in 2015, from the 14.5% seen for 2011. The company’s previous long-range profit margin goal was 12.5% for 2014.
The company’s sales and profit have been historically susceptible to cyclical demand swings for commercial trucks and construction machinery. But a decade-long campaign to diversify the company’s product lines and raise its sales in fast-growing emerging markets such as China, India and Brazil transformed Cummins into a larger and stronger company, Chairman and Chief Executive Tim Solso said.
“Where we are is clearly better than anybody at Cummins ever thought,” said Solso, who will be replaced as chairman and CEO by Linebarger at the end of the year.
The rapid construction of infrastructure and cities in emerging economies is driving demand for Cummins’s engines for construction equipment, commercial trucks, power generators and other machinery. Cummins’s engine sales are being further propelled by expanded production oil, natural gas and mined commodities.
Moreover, stricter standards for engine exhaust has allowed Cummins to flex its engineering muscle, particularly in the emerging markets where some domestic engine manufacturers lack the technical expertise to comply with the tougher standards. Linebarger predicted that further reductions in engine pollution and improving fuel efficiency will be dominant themes for engine technology for the next 10 years.
Cummins’ new strategy aims to make its engines more competitive at the lower price ranges of the engine markets. Like many U.S. capital equipment manufacturers trying to expand their sales in emerging markets, Cummins has run into stiff competition from domestic companies selling equipment at lower prices.
“There is no question that the competition is increasing,” said Linebarger. “Instead of running from low-cost Chinese competition, we’re going to be the low-cost Chinese competition.”
Columbus, Ind.-based Cummins Inc. second-quarter net income more than doubled on a steep increase in sales and a gain on the sale of its exhaust business, the engine maker said Tuesday (July 26).
The Associated Press reported that the results came in well ahead of Wall Street estimates and the company boosted its sales prediction for the year. In premarket trading, Cummins shares jumped $5.63, or 5.3%, to $112.29.
Cummins earned $505 million, or $2.60 per share, up from $246 million, or $1.25 per share, in the same quarter last year. Excluding the one-time gain on the sale of the exhaust business, Cummins said it posted an adjusted profit of $2.41 per share.
Sales rose 45% to $4.64 billion from $3.21 billion in the year-ago period.
Analysts, on average, expected a profit of $2.07 per share on $4.4 billion in sales, according to a FactSet survey.
Cummins, which makes diesel engines and power-generation equipment, said sales at its engine segment jumped 53% to $2.9 billion as a result of strong growth in worldwide truck markets and off-highway markets including mining and oil and gas.
Meanwhile, sales at Cummins’ components business rose 42% to $1 billion, as North American demand for on-highway products continued to recover. Sales at the company’s distribution segment rose 36% to $785 million, while power generation sales rose 28% to $909 million.
The company boosted its sales forecast for 2011 to $18 billion from its April prediction of $17 billion. Analysts expect $17.34 billion in sales for the year, according to FactSet.
Cummins Power Generation announced that Antonio Leitao has been named vice president, Power Products, responsible for generator sets below 1 MW.
According to a press release, the Power Products business unit will provide a portfolio of generator sets, generator drive engines and automatic transfer switches to meet global demand for standard power products in markets including recreational vehicle, telecom, rental, residential, military, commercial and recreational marine.
Leitao has been with the company since 2002, when he joined the Cummins as the director for commercial generator sets in the Europe, Middle East and Africa (EMEA) region based in the UK. In 2007, Leitao assumed leadership of the commercial generator set business in the Asia Pacific region and in 2008 he was promoted to executive director of Commercial Products. In that role, he was responsible for the global commercial generator set business.
Leitao came to Cummins from SDMO, where he held roles in operations, electrical engineering and global sales. Cummins Power Generation, based in Fridley, Minn., is a division of Cummins Inc.
As Columbus-based Cummins Inc. (NYSE: CMI) continues to grow internationally, the company’s incoming CEO is making it clear the engine maker’s roots are firmly in Indiana.
In an interview that will air this weekend on Inside INdiana Business Television, Tom Linebarger, who will become the sixth executive to lead the company since it was founded in 1919, says managing global growth will be a key challenge as Cummins moves forward and continued success in international markets will mean good things for Indiana.
Cummins currently has approximatley 6,000 employees in Indiana.
Linebarger, currently president and COO and a 17-year company veteran, will succeed Tim Solso as CEO January 1.
Solso’s retirement caps a 40-year career at Cummins, where he helped lead the company to record performance. Company sales grew from $6.6 billion in 2000 to $13.2 billion in 2010 – Cummins’ best year ever with a record profit of more than $1 billion.
The company’s market capitalization grew tenfold under Solso’s leadership.
As reported by the Indianapolis Star, Solso, 64, will be succeeded by Tom Linebarger, Cummins’ president and COO, the company said Tuesday (July 12).
Since Solso was named chairman and CEO of Columbus, Ind.-based Cummins in 2000, annual sales have doubled to $13.2 billion, its stock price has soared from a low of $4.28 a share in 2002 to a high of $121.49 in May, and international business has surged from 40% of sales to more than 60%.
“Tim has led the company through many years of record performance and outstanding shareholder returns,” said Alexis Herman, lead director of Cummins’ board.
The switch at the top was hardly unexpected at Cummins, a publicly traded Fortune 500 company that has had only five chief executives in its 92-year history.
“It’s time for fresh eyes to take this company to the next level,” Solso said. “It’s a great time to make the change.”
Linebarger, 48, has worked closely with Solso since being named CFO in 2000 and president and COO three years ago. He said he’ll retain his office at the company’s headquarters in Columbus after taking the top job Jan. 1. Solso in recent years primarily worked out of Cummins’ downtown Indianapolis office.
Solso, who has a bachelor’s degree in psychology from DePauw University in Greencastle, began his 40-year career at Cummins as an assistant in the personnel office. He later moved to the operations side of the business and worked for Cummins abroad, including in England and Brazil.
Barron’s magazine named him to its list of the 30 most respected company CEOs this year and last.
Solso, who lives in Indianapolis, said he’s been too busy running Cummins to make retirement plans. But they won’t include running another business, he said. He said he’d consider community work involving education, the environment or “social justice type issues.”
Linebarger, who has master’s degrees in business and engineering from Stanford University, began at Cummins as an intern working on an engine line. He was hired full time in 1994 and worked his way up through management jobs on the engine side.
The incoming CEO said he sees his biggest challenge as coping with Cummins’ growth opportunities. The company projects its sales to grow more than 12 percent a year, driven by demand for its high-efficiency truck engines and other power systems in the U.S. and abroad.
“The company is doing very well and has a good team in place. He (Solso) felt I was ready to go . . . and the board felt I was ready to go,” Linebarger said.
Cummins’ growth means hundreds of new jobs coming to Columbus, where the company is expanding its headquarters and manufacturing lines.
Cummins Inc. said Friday (June 10) it will hire 600 white-collar workers as part of a plan by the engine maker to triple the size of its headquarters work force in Columbus, Ind., by 2013, according to a report in the Wall Street Journal.
Many of the new jobs will be in engineering, information technology and human resources as Cummins expands its professional staff to accommodate the business growth it anticipates in the coming years, particularly overseas.
“Our success in global markets over the past few years allowed us to remain strong during the recent economic downturn and has positioned the company for a period of accelerated growth,” CFO Tom Linebarger said in a written statement.
The company expects to finish adding the 600 employees by the middle of 2013. Construction of a new office building will start this summer and is expected to be completed by late 2012. The 130,000-square-foot building will be connected to a similarly sized building that Cummins began using in 2009. The company late last year also purchased a former bank building across the street from its headquarters building that will house 350 employees by the end of this year.
Cummins projects its work force in downtown Columbus will reach 3,000 people by 2013, three times larger than the employee head count in 2008.
Cummins manufacturers engines used in commercial trucks and motorhomes along with a variety of commercial and industrial applications, including oil and gas drilling and electric power generation. The company reported record profit last year largely on the strength of its business in China, India and Brazil. Cummins expects sales and profit growth to continue this year as its end markets in the U.S. recover from the economic recession.
Minneapolis, Minn.-based Cummins Onan, a subsidiary of Cummins Inc., announced Wednesday (June 1) it had filled two positions within its Consumer Business division.
Anne Limthawornkit takes on Six Sigma black belt responsibilities for the Consumer marketing and sales organization, reporting to Cathy Buening-Griffin, executive director, Cummins Onan Consumer Business. Limthawornkit will also lead the Consumer Six Sigma process that includes project management, savings tracking and project-idea facilitation.
Limthawornkit joined Cummins Power Generation in 2008 in the Supply Chain Strategy, Improvement and Analytics group as a senior analyst. She earned a bachelor’s degree in business administration from Chulalongkorn University in Thailand in 2001 and an MBA with an emphasis in strategy and general management from the Carlson School of Management at the University of Minnesota. Prior to joining Cummins, Limthawornkit worked for Nestle in Thailand for five years, working on supply-chain-improvement projects.
Jess Goh has accepted the position of business development manager for the Asia Consumer business, also reporting to Buening-Griffin. Based in Singapore, Goh will have responsibility for leading the account management and business development of the consumer products for territories within the Asia region.
Prior to joining Cummins, Goh was with One Connect International, Ltd., in charge of the oil and gas business segment. She was responsible for negotiating, developing and concluding business deals as well as managing key accounts. She graduated from the National University of Singapore with a bachelor of science.