Cummins 1Q Net Up 33% On Strong North America Engine Sales
First Published Tuesday, 1st May 2012 02:49 pm - © 2012 Dow Jones
--Cummins' first-quarter engine segment sales rose 20%
--Strong demand from North American truck makers
--Weaker demand coming from China's construction machinery industry
(Updates with more details throughout on markets and business segments.)
By Bob Tita
Of Dow Jones NEWSWIRES
Cummins Inc.'s (CMI) first-quarter earnings rose 33%, as surging sales of the company's truck engines in North America offset weakening demand for engines in China and Brazil.
The company easily topped analysts' sales and profit expectations for the quarter, but did not raise its full-year guidance from February. That appeared to disappoint investors in early trading Tuesday. Cummins stock was down 2.8% at $112.62 a share.
The Columbus, Ind., company's sales and profit have been soaring lately on rising demand for its commercial truck engines in North America. The company reported that first-quarter revenue from the region increased 40% from a year earlier.
First-quarter sales from Cummins engine business, the company's largest business unit, rose 20% to $2.9 billion. First-quarter sales of heavy-duty truck engines, which are closely correlated to the North American truck manufacturers, rose 84% from a year earlier to $892 million.
Cummins share of engine market for heavy-duty trucks in North America has been approaching 50% lately, despite attempts by truck manufacturers to reduce their reliance on Cummins engines by building their own engines.
But orders for heavy-duty trucks in North America have been softening lately as truck buyers take a breather from buying amid slowing freight volumes, rising fuel costs and a shortage of drivers.
Cummins' engine sales in China weakened during the first quarter as the country's slower economic growth choked off demand for Cummins engines in construction machinery and trucks. Cummins forecast that industry wide sales of construction excavators in China will fall 15% this year from 2011. The company also predicted sales of commercial trucks in China will decline by 10%.
Cummins said its sales from Brazil dropped 18% on lower demand for trucks and construction equipment
Overall for the first quarter, Cummins reported a profit of $455 million, or $2.38 a share, up from $343 million, or $1.75 a share, a year earlier. Sales jumped 16% to $4.47 billion.
Analysts polled by Thomson Reuters had forecast earnings of $2.22 a share on revenue of $4.4 billion.
The company reiterated its full-year guidance from February calling for a 10% increase in sales and earnings before interest and taxes guidance totaling 14.5% to 15% of sales. That implies sales of $19.8 billion and earnings per share of $11 to $11.50.
-By Bob Tita, Dow Jones Newswires; 312-750-4129; firstname.lastname@example.org
--Melodie Warner contributed to this article.
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