Cummins net income up 56% amid increased demand of trucks, construction equipment

Cummins Inc. reported earnings of US$ 2.71 per share in the third quarter of 2017, was up from US$ 2.02, earned in the year-ago quarter. Net income rose 56.7% to US$ 453 million from US$ 289 million in the third quarter of 2016.

The Ohio-based global power company, best known for making diesel engines, saw its revenues improve 26.2% year over year to US$ 5.29 billion, attributed to an increased demand for trucks and construction equipment in North America and China, plus an increased demand for products from global mining customers.

Operating income increased to US$ 629 million from US$ 384 million a year ago. Earnings before interest and taxes (EBIT) were US$ 640 million (12.1% of sales) compared with US$ 398 million (9.5% of sales) a year ago.

Sales at the Engine segment grew 26% to US$ 2.3 billion on the back of a 25% increase in on-highway revenues and 30% in off-highway revenues, resulting from an escalated demand in global truck and construction market. The segment’s EBIT increased to US$ 229 million (9.8% of sales) from US$ 89 million (4.8% of sales) a year ago. 

Sales at the Components segment surged 34% to US$ 1.5 billion owing to revenue growth of 45% in China and India in addition to 26% increase in North America. The segment’s EBIT was US$ 217 million (14.2% of sales) compared with the year-ago figure of US$ 148 million (12.9% of sales). 

Sales at the Power Generation segment increased 23% to US$ 1.1 billion, banking on increased demand for industrial engines from mining and oil and gas markets. The segment’s EBIT rose to US$ 81 million (7.7% of sales) in third-quarter 2017 from US$ 59 million (6.9% of sales) in third-quarter 2016.

Sales at the Distribution segment shot up 17% to US$ 1.8 billion. Revenues benefited from the company’s acquisitions and divesting North America’s power generation rental assets. The segment’s EBIT plunged to US$ 91 million (5.2% of sales) from US$ 96 million (6.4% of sales) a year ago.

Cummins operates manufacturing sites in Ciudad Juarez and San Luis Potosi.

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