Cummins Inc. today reported record sales and profits in the second quarter, as strong global growth offset softness in some North American markets.
All four of the company's business segments reported record financial performance in the quarter, as non-U.S. sales grew to 61 percent of Cummins' business -- up from 54 percent for all of 2007 and 57 percent in the first quarter of 2008.
Second-quarter sales grew 16 percent to $3.89 billion, from $3.34 billion during the same period in 2007. Net income increased 37 percent to $293 million, or $1.49 a share, compared to $214 million, or $1.06 a share, in 2007.
Earnings Before Interest and Taxes (EBIT) of $469 million (12.1 percent of sales), was a 32 percent improvement over $354 million (10.6 percent of sales) during the same period a year ago.
The company experienced broad gains in product and geographic markets around the world, including:
- Strong sales growth and market share in the North American heavy-duty engine market. Despite high fuel prices and weakness in the U.S. economy, Cummins posted gains in this market, compared to 2007 when changes in emissions regulations led to sharply lower demand -- especially in the first half of the year.
- Strong medium-duty truck engine sales, especially in Brazil and Mexico.
- Increased demand in the company's commercial generator business, most notably in the Middle East, Latin America, China and the United Kingdom.
- Strong sales growth in North America, Europe and China for turbochargers.
- Significant sales gains for the company's Emission Solutions products in North America and Europe, driven by new emissions regulations.
- Significantly higher income from the company's joint ventures worldwide, led by Dongfeng Cummins Engine Company in China, which saw large gains as result of a pre-buy in the on-highway truck market in advance of new emissions standards.
- A 58 percent increase in the company's Distribution Business sales, led by strong organic growth in Europe, the South Pacific and Middle East and the acquisition of a majority interest in a previously independent distributor in the United States.
The company's strong second quarter performance came in the face of continued economic weakness in the United States, which has affected the company's consumer-related markers. For the quarter, engine sales to Chrysler for the Dodge Ram heavy-duty pickup fell more than 60 percent from the same period in 2007; RV engine sales fell nearly 40 percent and the company's consumer power generation sales were off more than 30 percent from a year ago.
"We had an outstanding second quarter in the face of some very real economic challenges, especially in the U.S.," said Cummins Chairman and Chief Executive Officer Tim Solso. "We are managing all of our businesses very carefully and the results speak to the effectiveness of our global growth strategy."
In light of the company's performance in the first half of the year and its forecast for the remainder of 2008, Cummins today also announced that is now forecasting a 15 percent sales increase for all of 2008, up from its previous guidance of 12 percent. The company expects to earn an EBIT margin of 10 percent of sales for the year.