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Cummins tops forecasts despite lower profit, revenue

May 3, 2016

Cummins Inc. on Tuesday reported lower first-quarter earnings and revenue, but the results topped the expectations of analysts.

The Columbus-based engine manufacturer reported a profit of $321 million, or $1.87 per share, down from $387 million, or $2.14 per share, in the same quarter of 2015.

The average estimate of 12 analysts surveyed by Zacks Investment Research was for earnings of $1.77 per share.

Cummins posted revenue of $4.29 billion in the period, down 9 percent from the same quarter in 2015. Five analysts surveyed by Zacks expected $4.33 billion.

Revenue in North America decreased 10 percent while international sales declined by 8 percent.

Lower production in the North American heavy-duty truck market and weak global demand for off-highway and power-generation equipment contributed to the reduction in sales, Cummins said.

Currency rates negatively impacted revenue by about 3 percent compared to last year, primarily due to a stronger US dollar, Cummins said.

“Our results for the first quarter reflect solid execution of our cost reduction plans in the face of very challenging market conditions,” Chief Operating Officer Rich Freeland said in a written statement. “Benefits from restructuring actions, material cost reduction projects and lower warranty costs all helped to mitigate the impact of lower sales.”

Cummins said it would leave its forecast from three months ago unchanged. It expects full-year 2016 revenue to be down 5 percent to 9 percent, and earnings before interest and taxes to be in the range of 11.6 to 12.2 percent of sales.

Shares in Cummins rose 1.5 percent early Tuesday, to $118.8 each. They have increased more than 33 percent since the beginning of the year.


 

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