Summary
Cummins Inc. (CMI) reported record-breaking financial results for the second quarter of 2008, driven by robust international demand that significantly offset weaker conditions in some North American markets. The company's sales increased by 16% to $3.89 billion, and net income surged by 37% to $293 million, or $1.49 per share, marking its best quarterly financial performance in history. All four of Cummins' business segments achieved record results, with non-U.S. sales comprising 61% of total business, up from 57% in the prior quarter and 54% for all of 2007. In light of this strong performance and positive outlook, Cummins raised its full-year 2008 sales growth guidance to 15%, up from the previous 12% forecast, and anticipates an EBIT margin of 10%. Despite ongoing economic uncertainty and rising material costs, the company projects 2008 will be its fifth consecutive year of record sales and profits. Key drivers of the success included strong demand for engines, power generation equipment, and components in international markets, as well as growth in its distribution business, partly due to acquisitions. The company also noted a $6 million charge related to June flooding in Indiana but expects insurance coverage to mitigate the financial impact.
Key Highlights
- 1Cummins Inc. reported record second-quarter 2008 sales of $3.89 billion, a 16% increase year-over-year.
- 2Net income for Q2 2008 was $293 million ($1.49 per share), a 37% increase from Q2 2007.
- 3International demand was a key driver, with non-U.S. sales reaching 61% of total business.
- 4The company raised its full-year 2008 sales growth guidance to 15% from 12%.
- 5All four business segments (Engine, Power Generation, Components, Distribution) reported record financial performance in the quarter.
- 6A $6 million charge was recognized due to flood damage in Indiana, but insurance is expected to cover most costs.
- 7Fitch Ratings upgraded Cummins' senior unsecured long-term debt to BBB+ from BBB.