Tue Oct 31, 2017
COLUMBUS, Ind.—Cummins Inc. has reported third quarter revenues increased 26 percent to $5.3 billion from the same quarter in 2016.
Revenues in North America increased 25 percent due to higher demand in truck, oil and gas and construction markets. International sales grew 28 percent primarily due to strong truck and construction demand in China, sales of new products in India and increased demand from global mining customers.
Net income attributable to Cummins in the third quarter was $453 million, or $2.71 per diluted share, compared to $289 million, or $1.72 per diluted share. The tax rate in the third quarter of 2017 was 26.5 percent.
Earnings before interest and taxes (EBIT) was $640 million, or 12.1 percent of sales, an increase from $398 million, or 9.5 percent of sales, a year ago.
“Cummins experienced positive momentum in demand in a number of important markets, resulting in strong sales growth in the third quarter,” Cummins Chairman and CEO Tom Linebarger says. “Earnings improved over the year-ago period due to stronger volumes and operational improvements that more than offset increased quality costs. Year to date, we have returned $913 million to shareholders in the form of dividends and share repurchases consistent with our plan to return 50 percent of Operating Cash Flow in 2017.”
Based on its current forecast, Cummins expects full-year 2017 revenues to grow 14 to 15 percent, an increase from the company’s previous projection of 9 to 11 percent growth, according to a company press release. EBIT is expected to be in the range of 11.8 to 12.2 percent of sales, which is unchanged from the prior guidance except for the inclusion of the impact of the new Eaton Cummins Automated Transmission Technologies joint venture. The joint venture, which is consolidated within the components segment, is expected to report 2017 sales of about $150 million and negative EBIT of $25 million due in part to the amortization of intangible assets.
Third quarter 2017 highlights
The company entered into an asset purchase agreement with Brammo Inc., which designs and develops battery packs for mobile and stationary applications. When complete, this will be an important milestone in Cummins’ efforts to become a global electrified power leader, according to a press release.
The Eaton Cummins Automated Transmission Technologies joint venture became fully operational on schedule on Aug. 1. The joint venture will capitalize on the secular shift to more automated transmissions in commercial vehicle markets.