July 23, 2002 — Cummins Inc. reported second quarter earnings of $.33 per share, or $13 million profit after taxes, on sales of $1.46 billion.
This compares to a loss of $2.14 per share, or an $82 million loss after taxes in the second quarter of 2001 on flat sales of $1.46 billion. The loss in 2001 was inclusive of a $125 million pre-tax charge associated with restructuring actions.
“Our earnings this quarter reflect the beginning of a slow recovery in our industry and the continued success of our Six Sigma, cost reduction, and quality improvement programs at Cummins,” said Chairman and Chief Executive Officer Tim Solso. “Despite flat sales from a year ago, we were able to deliver higher operating earnings and considerable improvement in earnings per share for the quarter.”
Revenues of $304 million in Power Generation were down 21 percent from the second quarter of 2001. In North America, revenues were down 26 percent compared to a year ago, with lower demand in our commercial genset business due to lower economic activity generally, reduced emergency power needs, and high inventory levels in the marketplace.
This decrease was partially offset by increased demand in Cummins’ consumer business, primarily recreational vehicle sales. Consumer business revenues increased 23 percent compared to the second quarter of 2001.
Outside North America, revenues declined in Europe, India, and China compared to the second quarter of 2001 due to lower demand. Revenues increased in Latin America by 17 percent year-over-year, due to the continued effects of the energy crisis.
For the remainder of 2002, the Company expects some improvement in the majority of it’s markets, with the exception of the heavy-duty truck segment, which is expected to see volatility in the remaining two quarters of 2002. The heavy-duty truck segment will provide stronger earnings in the third quarter than previously forecasted, with lower earnings in the fourth quarter.
“As demonstrated in this quarter’s earnings, we continued to make progress on our cost reduction efforts, allowing us to substantially lower our breakeven point,” said Solso.
“This, combined with strength in our Chrysler and RV business, will permit us to maintain profitability, despite a short-term fall-off in the heavy-duty market.”
Guidance for the full year 2002 remains in the previously announced range of $.70 to $.80 cents per share. The Company expects to deliver profit in the range of $.90 to $1.00 per share in the third quarter. Total company sales for the year are still expected to be flat to up 5% compared to 2001. The Company now expects Power Generation sales to be down at least 10%, with Engine Business sales up nearly 10% compared to last year.
The International Distributor Business and the Filtration and Other Business are expected to deliver modest increases in sales. Continued emphasis on cost reduction in all business units will also contribute toward the Company’s expectations of full year profitability.
A global power leader, Cummins Inc., is a corporation of complementary business units that design, manufacture, distribute, and service electrical power generation systems, engines, and related technologies, including fuel systems, controls, air handling, filtration, and emissions solutions.
Headquartered in Columbus, Indiana (USA), Cummins serves its customers through more than 500 company-owned and independent distributor locations in 131 countries and territories. With 24,900 employees worldwide, Cummins reported sales of $5.7 billion in 2001. Cummins home page can be found at www.cummins.com.