Cummins Announces 4th Quarter and Full Year 2015 Results

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Cummins Press Release / February 4, 2016

Cummins today reported results for the fourth quarter and full year of 2015.

Fourth quarter revenues of $4.8 billion decreased 6 percent from the same quarter in 2014, with the impact of currency, primarily a stronger US dollar, negatively impacting sales by 4 percent.

Revenues in North America declined 2 percent while international sales declined by 12 percent. Within international markets, sales in Latin America declined the most.

Earnings before interest and taxes (EBIT) in the fourth quarter of 2015 were $531 million, or 11.1 percent of sales, excluding charges for impairments of $211 million and restructuring of $90 million. This compares to $661 million or 13.0 percent of sales a year ago, excluding $32 million of expense related to cost reduction activities in the Power Generation segment in 2014.

Other recent highlights:

- The Company increased its dividend by 25 percent and repurchased 7.2 million shares

- For the eighth consecutive year, Cummins was named one of the world’s most ethical companies by the Ethisphere Institute

- Diversity Inc named Cummins as one of the Top 50 companies for diversity for the seventh consecutive year

- The Company was named as a winner of the Golden Peacock Award for Excellence in Corporate Governance

Cummins was named to the 2015 Dow Jones North American Sustainability Index for the tenth consecutive year

Read the full press release – including fourth quarter 2015 detail for all Cummins business units – by clicking on the link below.

Press Release – Cummins Announces Financial Results for the Fourth Quarter and Full Year 2015

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Engine Maker Cummins Hit by Slowing Truck Sales

The Wall Street Journal / February 5, 2016

Engine maker Cummins Inc. said its fourth-quarter profit plunged 64%, becoming the latest U.S. equipment maker pulled down by sliding demand for trucks in North America, anemic commodity prices and slower growth in developing markets.

"Due to weak or slowing demand in many our major markets, 2016 will be another challenging year," Chairman and Chief Executive Tom Linebarger said during a conference call on Thursday.

The Columbus, Ind., company's new outlook implies 2016 revenue of between $17.3 billion and $18 billion, with earnings per share of about $7.90, according to analysts. Cummins's revenue for 2015 was about flat with 2014 at $19.1 billion. Profit for the year declined 15% to $1.4 billion, or $7.84 a share.

Its stock rose 7.6% to $97.57 at 4 p.m. in New York trading as part of a broad advance by industrial stocks.

Fourth-quarter profit was lower than expected, reflecting weaker demand for Cummins's commercial trucks in North America. Truck buyers dialed back purchases late in the year as U.S. industrial activity weakened.

The leading supplier of engines for heavy-duty commercial trucks said its fourth-quarter sales of heavy-duty truck engines fell 11% from a year earlier to $700 million.

A flurry of truck orders early in 2015 pushed North American truck sales to their highest level since 2006. With most trucking fleets already well-stocked with new equipment, Cummins expects industry heavy-duty truck output will fall 25% this year. The decline is in line with forecasts offered this week by truck -transmission maker Eaton and truck-axle manufacturer Meritor.

Cummins expects its revenue from heavy-duty truck engines to fall 20% this year from 2015 because of declining truck volumes in North America.

It recorded a fourth-quarter impairment charge of $211 million to reflect the diminished value of its light-duty truck engine business. Cummins, which supplies diesel engines for Ram and Nissan pickup trucks, expanded production capacity for V-8 engines in the U.S. in anticipation of additional customers.

"In light of the current economic situations [that expansion] is less likely in the short-term," said Rich Freeland, chief operating officer. "We'll add some non-pickup truck customers in 2016."

Cummins is facing tough business conditions in once-highflying engine markets in China and Brazil. The company said revenue from Brazil plunged 48% last year under the weight an economic recession.

Overall for the fourth quarter, Cummins reported a profit of $161 million, or 92 cents a share, down from $444 million, or $2.44 a share, a year earlier. Excluding one-time items, per-share earnings fell to $2.02 from $2.56 a year ago. Revenue declined 6% to $4.77 billion.

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After a decade of integrated truck makers trying to squeeze them out, Cummins survives and thrives... There's a lesson there.