Cummins Reports Results for the First Quarter of 2013, Maintains Full Year Guidance for Revenues and

Cummins Reports Results for the First Quarter of 2013, Maintains Full Year Guidance for Revenues and EBIT

  • First quarter revenues of $3.9 billion and EBIT 11.1 percent of sales
  • Continues to expect full year revenues to be flat to down 5 percent
  • Maintains full year EBIT guidance to be in the range 13 to 14 percent of sales

COLUMBUS, Ind.--(BUSINESS WIRE)-- Cummins Inc. (NYS: CMI) today reported results for the first quarter of 2013.

First quarter revenues of $3.9 billion decreased 12 percent from the first quarter of 2012. Revenues in North America declined by 15 percent and international revenues declined by 10 percent as the Company experienced weaker demand in most major geographies and end markets.

Earnings before interest and taxes (EBIT) were $437 million or 11.1 percent of sales, compared to $658 million or 14.7 percent of sales a year ago.

Net income attributable to Cummins in the first quarter was $282 million ($1.49 per diluted share), compared to $455 million ($2.38 per diluted share) in the first quarter of 2012.

The most significant decline in demand occurred within the Engine Business, with total unit volumes down 18 percent year-over-year. Shipments of high horsepower engines declined by 24 percent due to weakness in mining, oil and gas and power generation markets.

"As anticipated, we experienced weak demand in the first quarter in many of our major markets," said Chairman and CEO Tom Linebarger. "While uncertainty remains in a number of markets, we expect that the first quarter will mark the low point of the year for Company revenues. We expect moderately improving order trends in on-highway and construction markets in North America to be the most significant drivers of improvement in revenues going forward. We continue to make investments in our distribution system and in new products as we remain focused on future profitable growth."

Based on the current forecast, the Company expects full year revenues to be flat to down 5% and EBIT to be in the range of 13 to 14 percent of sales.

Recent highlights include:

  • Cummins was named to the Ethisphere Institute's list of the World's Most Ethical Companies for a sixth consecutive year.
  • Moody's Investors Service agency announced that it has raised the unsecured rating of Cummins to A3.
  • FORTUNE magazine named Cummins one of America's Most Admired Companies.
  • Cummins announced that the next-generation QSB4.5 engine will meet Tier 4 Final near-zero emissions standards with increased horsepower and a higher peak torque.
  • Cummins Westport announced that it has received certification for its ISX12 G (natural gas) engine from the U.S. Environmental Protection Agency.
  • Cummins launched the QSM12, a 12L heavy-duty engine for off-highway applications that meets US Tier 4 Final and EU stage IV near-zero emissions regulations.
  • Industrial manufacturer Eaton and Cummins unveiled a new powertrain package for the North American heavy-duty truck market that is expected to deliver a fuel economy improvement of three to six percent.
  • The first L9.3 engine rolled off the production line at Guangxi Cummins Engine Company Limited in Liuzhou, southern China, a joint venture between Cummins and LiuGong Machinery.

First quarter detail (all comparisons to same period in 2012)

Engine Segment

  • Sales - $2.3 billion, down 19 percent
  • Segment EBIT - $195 million, or 8.5 percent of sales, compared to $381 million or 13.3 percent of sales
  • Lower demand in North American heavy duty truck, oil and gas, and bus markets and global mining were the most significant drivers of the lower revenues
  • Demand increased modestly in North America, Latin America and Korea for engines for agricultural applications


  • Sales - $1.0 billion, a decrease of 7 percent
  • Segment EBIT - $119 million, or 11.7 percent of sales, compared to $143 million or 13.0 percent of sales
  • Lower revenues primarily related to lower on-highway demand in North America

Power Generation

  • Sales - $746 million, down 4 percent
  • Segment EBIT - $51 million, or 6.8 percent of sales, compared to $76 million or 9.7 percent of sales
  • Lower demand in Europe, Brazil and China offsetting stronger revenues in North America, India and Africa


  • Sales - $778 million, down 11% excluding acquisitions
  • Segment EBIT - $95 million, or 12.2 percent of sales, compared to $94 million or 12.1 percent of sales
  • Reduction in revenues due to weaker demand in the construction market in Europe, the oil and gas market in North America and a reduction in orders for power generation in Asia Pacific and the Middle East

About Cummins

Cummins Inc., a global power leader, is a corporation of complementary business units that design, manufacture, distribute and service diesel and natural gas engines and related technologies, including fuel systems, controls, air handling, filtration, emission solutions and electrical power generation systems. Headquartered in Columbus, Indiana, (USA) Cummins currently employs approximately 46,000 people worldwide and serves customers in approximately 190 countries and territories through a network of approximately 600 company-owned and independent distributor locations and approximately 6,500 dealer locations. Cummins earned $1.65 billion on sales of $17.3 billion in 2012. Press releases can be found on the Web at Follow Cummins on Twitter at @Cummins and on YouTube at CumminsInc.

Forward-looking disclosure statement

Information provided in this release that is not purely historical are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including statements regarding our forecasts, guidance, preliminary results, expectations, hopes, beliefs and intentions on strategies regarding the future. These forward looking statements include, without limitation, statements relating to our plans and expectations for our revenues for the full year of 2013. Our actual future results could differ materially from those projected in such forward-looking statements because of a number of factors, including, but not limited to: the adoption and implementation of global emission standards; the price and availability of energy; the pace of infrastructure development; increasing global competition among our customers; general economic, business and financing conditions; governmental action; changes in our customers' business strategies; competitor pricing activity; expense volatility; labor relations; and other risks detailed from time to time in our Securities and Exchange Commission filings, including particularly in the Risk Factors section of our 2011 Annual Report on Form 10-K. Shareholders, potential investors and other readers are urged to consider these factors carefully in evaluating the forward-looking statements and are cautioned not to place undue reliance on such forward-looking statements. The forward-looking statements made herein are made only as of the date of this press release and we undertake no obligation to publicly update any forward-looking statements, whether as a result of new information, future events or otherwise. More detailed information about factors that may affect our performance may be found in our filings with the Securities and Exchange Commission, which are available at or at in the Investor Relations section of our website.

Presentation of Non-GAAP Financial Information

EBIT is a non-GAAP measure used in this release, and is defined and reconciled to what management believes to be the most comparable GAAP measure in a schedule attached to this release. Cummins presents this information as it believes it is useful to understanding the Company's operating performance, and because EBIT is a measure used internally to assess the performance of the operating units.

Webcast information

Cummins management will host a teleconference to discuss these results today at 10 a.m. EST. This teleconference will be webcast and available on the Investor Relations section of the Cummins website Participants wishing to view the visuals available with the audio are encouraged to sign-in a few minutes prior to the start of the teleconference.

(Unaudited) (a)
Three months ended
March 31,December 31,April 1,
In millions, except per share amounts201320122012
NET SALES$3,922$4,292$4,472
Cost of sales 2,965 3,234  3,274
GROSS MARGIN9571,0581,198
Selling, general and administrative expenses444482475
Research, development and engineering expenses182174181
Equity, royalty and interest income from investees (Note 1)8282104
Other operating income (expense), net 1 (19) 2
Interest income558
Interest expense678
Other income (expense), net 18 10  2
Income tax expense (Note 2) 119 75  175
Less: Net income attributable to noncontrolling interests 30 29  20
(a) Prepared on an unaudited basis in accordance with accounting principles generally accepted in the United States of America.
(Unaudited) (a)
In millions, except par valueMarch 31, 2013December 31, 2012
Current assets
Cash and cash equivalents$1,483$1,369
Marketable securities 196  247 
Total cash, cash equivalents and marketable securities1,6791,616
Accounts and notes receivable, net2,4962,475
Prepaid expenses and other current assets 658  855 
Total current assets 7,220  7,167 
Long-term assets
Property, plant and equipment5,9425,876
Accumulated depreciation (3,173) (3,152)
Property, plant and equipment, net 2,769  2,724 
Investments and advances related to equity method investees944897
Other intangible assets, net366369
Other assets 1,013  946 
Total assets$12,756 $12,548 
Current liabilities
Loans payable$13$16
Accounts payable (principally trade)1,5541,339
Current maturities of long-term debt5461
Current portion of accrued product warranty396386
Accrued compensation, benefits and retirement costs280400
Deferred revenue230215
Taxes payable (including taxes on income)203173
Other accrued expenses 527  546 
Total current liabilities 3,257  3,136 
Long-term liabilities
Long-term debt736698
Postretirement benefits other than pensions422432
Other liabilities and deferred revenue 1,296  1,308 
Total liabilities 5,711  5,574 
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