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Cummins profit jumps on demand from emerging markets

April 27, 2010

Cummins Inc. on Tuesday reported higher sales and improved profit on robust demand for its engines and power-generation equipment in developing countries such as China, India and Brazil.

The Columbus-based engine manufacturer reported first-quarter profit of $149 million, or 75 cents a share, up from $7 million, or 4 cents a share, in the same period a year ago.

Revenue rose 2 percent, to $2.48 billion.

Thomson Reuters analysts had expected Cummins to report a profit of 35 cents a share on sales of $2.41 billion.

Three of the company’s four business segments showed improved profits compared with the first quarter of 2009, with only the later-cycle power-generation business reporting a decline.

“Our strength in large developing markets such as China, India and Brazil has given us a significant boost as those economies have continued to recover from the recession more quickly than other regions,” Cummins Chairman and CEO Tim Solso said in a prepared statement.

Cummins, however, reported weaker demand in North America, with medium-duty truck and bus, and heavy-duty engine shipments declining 80 percent from the same period a year ago. The fall was even more severe—90 percent—compared with the fourth quarter of 2009.

The positive earnings prompted Cummins to improve its forecast for 2010. The company said it now expects this year to earn an EBIT (earnings before interest and taxes) margin of 10 percent on revenue of $12 billion, up from an earlier estimate of 7 percent on revenue of $11 billion.

Company shares were trading mid-morning at $74.94 each, up 6.5 percent from their opening price.
 

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