Cummins Q2 Profit Beats Wall Street Estimates

Engine manufacturer Cummins Inc. exceeded analysts' forecasts with its second-quarter earnings, despite flat year-over-year revenue.

Excluding gains from divestitures, Columbus, Ind.-based Cummins (IW 500/64) reported earnings per share of $2.45, up from $2.41 in second-quarter 2011 and easily topping analysts' estimates, which were in the neighborhood of $2.30.

Second-quarter revenue dropped 4% year-over-year to $4.45 billion, although it was flat when excluding the impact of divestitures and currency fluctuations.

Sales in its engine segment were down 2% to $2.8 billion. But the company noted that an uptick in demand in the North American truck and construction markets helped offset lower sales in the Chinese construction, Brazilian truck and North American oil and gas markets.

"The company continued to deliver strong profits despite the weakening global economic conditions," said Chairman and CEO Tom Linebarger. "Second-quarter gross margins were at record levels as we continue to drive improvements in productivity and quality. Looking forward, as the global economy improves, our growth opportunities remain strong."

Earnings before interest and taxes (EBIT) was $669 million, or 15% of sales.

Excluding gains from divestitures, EBIT was $663 million, or 14.9% of sales, compared with $707 million, or 15.2% of sales, in second-quarter 2011.

Based on its current forecast, Cummins said it expects full-year revenue of $18 billion, with EBIT in the range of 14.25% to 14.75% of sales.

The engine maker also pointed to several recent highlights, including its 25% dividend increase and its recognition by Chrysler Group LLC as the 2012 Sustainability Supplier of the Year.