Cummins reports 4% revenue increase for second quarter 2015

Cummins had a 4% revenue increase for the second quarter, with revenues in North America up 12%; full year revenue is expected to increase 2 to 4%.

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Cummins Inc. reports results for the second quarter of 2015. Second quarter revenue of $5.0 billion increased 4% from the same quarter in 2014. The increase year-over-year was driven by stronger demand in on-highway markets and distributor acquisitions in North America. Currency negatively impacted revenues by 4% compared to last year, primarily due to a stronger U.S. dollar.

Revenues in North America increased 12% while international sales declined by 6%. Within international markets, sales in Brazil fell the most due to the weak economy.

Earnings before interest and taxes (EBIT) increased to $721 million for the second quarter or 14.4% of sales, up from $657 million or 13.6% of sales a year ago.

Net income attributable to Cummins grew 6% in the second quarter to $471 million ($2.62 per diluted share), compared to $446 million ($2.43 per diluted share) in the second quarter of 2014. The tax rate in the second quarter of 2015, including discrete items, was 29.5%.

“We delivered strong results in the second quarter, despite challenging economic conditions in a number of international markets, and we increased cash returned to shareholders,” says Cummins Chairman and CEO Tom Linebarger. “Earnings improved as a result of good performance by our manufacturing and supply chain organizations and solid execution on material cost reduction initiatives. We returned $517 million to shareholders in the form of dividends and share repurchases in the second quarter and we recently announced a 25% increase in our quarterly dividend.”

Based on the current forecast, Cummins expects full year 2015 revenues to grow between 2 and 4%, and EBIT to be in the range of 13.5 to 14.0% of sales.

Other recent highlights:

  • For the ninth consecutive year, Cummins was named one of the Top 50 Companies for Diversity by Diversity Inc.
  • The company announced new environmental sustainability goals and pledged to reach an annual reduction of 3.5 million metric tons of carbon dioxide (CO2) by 2020, which equates to 350 million gallons of fuel.
  • John Wall, Cummins’ Vice President – Chief Technical Officer, was honored by the California Air Resources Board with the Haagen-Smit Clean Air Award, which recognizes outstanding lifetime achievement in air-quality research, science and technology.
  • For the fourth consecutive year, Cummins was recognized as a Top 25 Supply Chain company by Gartner.
  • Cummins announced that John Wall, Vice President – Chief Technical Officer, will be retiring after nearly 30 years with the company and that Jennifer Rumsey, Vice President of Engineering for Cummins’ Engine Business, will take Wall’s place.
  • Cummins announced a 25% increase in its quarterly dividend.

Second quarter 2015 detail (all comparisons to same period in 2014)

Engine Segment

  • Sales - $2.8 billion, up 2%.
  • Segment EBIT - $341 million, or 12.2% of sales, compared to $311 million or 11.3% of sales.
  • Strong demand in North American truck and bus markets was partially offset by weaker demand in global industrial markets and lower truck demand in Brazil.

Distribution Segment

  • Sales - $1.5 billion, up 21%, down 6% excluding acquisitions.
  • Segment EBIT - $113 million, or 7.6% of sales, compared to $126 million or 10.2% of sales.
  • Currency movements negatively impacted sales by 6%.
  • Results in the second quarter of 2014 included a gain of $14 million related to the acquisition of distributors in North America.

Components Segment

  • Sales - $1.4 billion, up 9%.
  • Segment EBIT - $223 million, or 16.0% of sales, compared to $185 million or 14.5% of sales.
  • Stronger demand in on-highway markets in North America, Europe and China more than offset weakness in Brazil.

Power Generation Segment

  • Sales - $747 million, up 1%.
  • Segment EBIT - $57 million, or 7.6% of sales, compared to $61 million, or 8.2% of sales.
  • Increased international sales in the Middle East, Asia Pacific and India more than offset lower sales in North America and a 4% reduction in revenues due to currency movements.