The Economy

Cummins Q2 Profit Beats Wall Street Estimates

July 31, 2012

Excluding gains from divestitures, Cummins 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.

Josh Cable

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.

About the Author

Josh Cable | Former Senior Editor

Former Senior Editor Josh Cable covered innovation issues -- including trends and best practices in R&D, process improvement and product development. He also reported on the best practices of the most successful companies and executives in the world of transportation manufacturing, which encompasses the aerospace, automotive, rail and shipbuilding sectors.

Josh also led the IndustryWeek Manufacturing Hall of Fame, IW’s annual tribute to the most influential executives and thought leaders in U.S. manufacturing history.

Before joining IndustryWeek, Josh was the editor-in-chief of Penton Media’s Government Product News and Government Procurement. He also was an award-winning beat reporter for several small newspapers in Northeast Ohio.

Josh received his BFA in creative writing from Bowling Green University, and continued his professional development through course-work at Ohio University and Cuyahoga Community College.

A lifelong resident of the Buckeye State, Josh currently lives in the Tremont neighborhood of Cleveland. When the weather cooperates, you’ll find him riding his bike to work, exercising his green thumb in the backyard or playing ultimate Frisbee.