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Prime Mover Magazine


Cummins reports Q2 2018 revenues of $8.2 billion

Independent diesel engine producer, Cummins, has delivered growth in most major markets as demand for trucks, construction, mining and power generation equipment all improved. Second quarter revenues of $8.2 billion increased 21 per cent from the same quarter in 2017 and reached a new quarterly record.

Sales in North America improved by 22 per cent while international revenues increased by 18 per cent led by growth in China, Europe and Latin America.

"As a result of strong customer demand for our products, solid execution from our global manufacturing and supply chain teams and continued focus on cost reduction, the company delivered record quarterly sales and earnings per share in the second quarter,” said Cummins Chairman and CEO, Tom Linebarger. “We are on track to deliver record full year sales, earnings and cash flow.  The Company now plans to return 75 per cent of operating cash flow to shareholders in the form of dividends and share repurchases in 2018, up from our previous plan to return 50 per cent."

During the second quarter, Cummins finalised its plans for a previously disclosed product campaign and recorded a pre-tax charge of $244.6 million for the expected costs of the campaign. This campaign will address the performance of an aftertreatment component in certain on-highway products produced between 2010 and 2015 in North America. Cummins has reached agreement with the appropriate regulatory agencies regarding our planned actions to execute the campaign and has provided in full for the estimated costs.

Earnings before interest, taxes, depreciation and amortisation (EBITDA) in the second quarter were $1.2 billion, or 14.6 per cent of sales, up from $1 billion or 15.0 per cent of sales a year ago. 

Net income attributable to Cummins in the second quarter was $736.6 million ($4.48 per diluted share), compared to net income of $573 million ($3.41 per diluted share) in the second quarter of 2017. 

Based on the current forecast, Cummins expects full year 2018 revenues to be up 15 to 17 per cent, compared to prior guidance of up 10 to 14 per cent.  EBITDA is projected to be in the range of 14.8 to 15.2 per cent of sales, down from 15.4 to 15.8 percent of sales and reflects approximately $135.1 million of expense associated with trade tariffs and increased commodity costs in the second half of the year.

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