Diesel Progress / Diesel Progress January 2006 / Cummins Quarterly Profit Up 40%

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Cummins Quarterly Profit Up 40%

Cummins Inc. said fourth-quarter net income jumped 40% on soaring international demand, combined with record performances from its distribution and power generation businesses. The Columbus, Indiana-based company said net profit rose to $167 million from $119 million a year earlier and engine sales rose 23% to $1.84 billion from $1.5 billion.

Full-year sales totaled $9.9 billion, compared with $8.4 billion in 2004. International sales represented 51% of total consolidated sales, and 55% in the fourth quarter. "As good as the last two years have been, we are expecting 2006 to be more profitable, even if growth in our end-markets moderates," Chief Executive Officer Tim Solso said in a statement.

Sales in the fourth quarter rose 17% to a record $2.75 billion from $2.35 billion a year earlier, above analysts' expectations of $2.65 billion. Cummins' margin for the quarter was 22.5%, compared with 20.1% in the same period in 2004.

Analysts said the company put in a solid performance in the quarter, with the outlook for 2006 also good, spurred mainly by U.S. trucking companies buying ahead of the implementation of 2007 EPA emissions standards. Once the new emission requirements are in place, analysts said the challenge for Cummins will be to maintain sales in 2007. Cummins has insisted that by moving into power generation, components and distribution, plus its expanding international business, the company will absorb much of that shock.