Cummins on Tuesday reported results for the second quarter of 2016.
A report from the company says that second quarter revenues of $4.5 billion decreased 10 percent from the same quarter in 2015. The decrease was blamed largely on lower truck production in North America and weak global demand for off-highway and power generation equipment. Company officials say that currency negatively impacted revenues by about one-percent compared to last year, primarily due to a stronger U.S. dollar.
The report goes on to say that revenues in North America were down 13 percent while international sales dropped by four percent. Within international markets, revenues in the Middle East, Mexico and Brazil declined the most, say Cummins officials.
Earnings before interest and taxes (EBIT) in the second quarter were $591 million, or 13.1 percent of sales, down from $721 million or 14.4 percent of sales a year ago, says the report.
Net income attributable to Cummins was $406 million, ($2.40 per diluted share), compared to $471 million ($2.62 per diluted share) in the second quarter of 2015. The report goes on to say that the company’s tax rate in the second quarter of 2016 was 25.7 percent.
“We made strong progress in our cost reduction initiatives in the second quarter, while continuing to invest in and launch new products that will drive profitable growth in the future,” said Tom Linebarger, Cummins Chairman and CEO. “Benefits from restructuring actions, material cost reduction initiatives, and improvements in product quality helped to mitigate the impact of weak demand in a number of our largest markets and will position the Company for stronger performance when markets improve. We have returned more than $1 billion to shareholders so far this year, through a combination of dividends and share repurchases. Our Board of Directors recently approved an increase in our quarterly dividend of 5.1 percent, consistent with our plans to return 75 percent of operating cash flow to shareholders in 2016,” concluded Linebarger.
Based on the current forecast, Cummins officials say that they expect full-year 2016 revenues to be down eight to 10 percent. They note that this figure is lower than the company’s previous guidance of a five-to-nine percent drop. The company says this is primarily due to a lower outlook for North America truck production and weaker demand in global off-highway markets.
Overall, Cummins announced decreases in the second quarter, compared to the second quarter of 2015 in it’s Engine Segment, Components Segment and Power Systems Segment. The company reported that its Distribution Segment sales were up by three percent, to $1.5 billion.
Other recent second quarter news reported by Cummins includes:
• Cummins won the 2016 Award of Excellence in Energy Management from the Clean Energy Ministerial (CEM), a high-level global forum that promotes policies and programs to advance clean energy
• The Board of Directors approved an increase in the Company’s quarterly cash dividend from 97.5 cents per share to $1.025 per share
• Cummins was recently named as one of the Top 50 Companies for Diversity by DiversityInc for the tenth consecutive year
• The Company repurchased 1.8 million shares in the second quarter