Summary
Cummins Inc. reported a record-breaking third quarter for profitability in 2006, with an 18% increase in net earnings and a 14% rise in sales compared to the same period in 2005. Sales reached $2.81 billion, and net income was $171 million, or $3.37 per share. Both the Power Generation and Distribution segments demonstrated significant double-digit growth, exceeding their targeted sales and profit ranges. The Engine Business, while still growing at 10%, experienced a slight slowdown in light-duty automotive volumes due to industry-wide inventory adjustments. The company's strong performance has bolstered its financial position, increasing cash by $248 million year-to-date, enabling debt reduction and increased pension funding. Cummins reaffirms its full-year earnings guidance and anticipates a solid 2007, projecting flat to 5% sales growth, supported by investments in new products, emerging markets like China and India, and strategic cost controls, despite anticipated temporary market slowdowns related to new emissions regulations.
Key Highlights
- 1Achieved record third-quarter net earnings of $171 million ($3.37 per share), an 18% increase year-over-year.
- 2Total sales grew 14% to $2.81 billion, with all business segments reporting double-digit percentage sales growth.
- 3Power Generation and Distribution segments exceeded targeted sales and profit ranges due to strong demand.
- 4Engine Business sales rose 10%, with strong performance in heavy-duty and medium-duty segments, despite a decline in light-duty automotive volumes.
- 5Company's cash position improved by $248 million year-to-date, with plans to repay an additional $250 million in long-term debt.
- 6Reaffirmed full-year 2006 earnings guidance and provided a positive outlook for 2007 with expected sales growth of 0-5%.
- 7Announced strategic investments in new light-duty diesel engines and a joint venture in China for the light commercial vehicle market.