Cummins First Quarter Revenues Fall 17%
By Mike Brezonick28 April 2020
Cummins reported that its revenues in the first quarter of 2020 were $5.0 billion, down 17% from the same period in 2019. Lower truck production in North America and weaker demand in global construction, mining and power generation markets drove the majority of the revenue decrease, the company said.
Sales in North America declined by 16% while international revenues decreased 17%, led by declines in Europe, Asia Pacific, Latin America, India and China.
Earnings before interest, taxes, depreciation and amortization (EBITDA) in the first quarter were $846 million (16.9%), compared to $1.0 billion (17.2% of sales) a year ago. Net income in the first quarter was $511 million compared to $663 million in 2019. First quarter net income included a benefit of $35 million resulting from recent changes to tax law in India.
“We delivered strong profitability in the first quarter, supported by the commitment of our employees to serve our customers and the benefit of cost reduction actions we initiated in the second half of 2019,” said Chairman and CEO Tom Linebarger. “Amidst the unprecedented COVID-19 pandemic, the health and safety of our employees and the communities in which we operate is our top priority. Our teams are working hard to support the global economy, leveraging our flexibility and strong supplier network to help our customers deliver essential products and support response efforts. Given the significant impact the pandemic will have on demand across our industry in the second quarter and beyond, we are continuing to take actions to reduce cost and boost our already strong liquidity.”
Looking at the first quarter by business unit, the Engine Segment had sales of $2.2 billion, down 19% from the same period in 2019. On-highway revenues fell 17% and off-highway revenues decreased 23%, primarily due to decreased global demand in truck and construction markets, Cummins said.
The Distribution Segment saw sales fall 9% to $1.8 billion. Revenues in North America were down 11% and international sales declined by 6%. The Components Segment saw a 19% slide from 2019, to $1.5 billion. Revenues in North America were off by 24% and international sales declined by 12%, both due to weaker global truck demand, Cummins said.
The Power Systems Segment has sales of $884 million, down 18%. Power generation revenues decreased by 8% percent while industrial revenues decreased 30%. The New Power Segment reported sales of $10 million.
“During our 100-year history, we have encountered several unforeseen crises, and I am confident we will successfully navigate this one as we have done before, to emerge stronger,” said Linebarger. “Cummins enters this period of uncertainty in a position of strength with an experienced leadership team that has led through multiple cycles and a strong balance sheet. Our deep customer and supplier relationships combined with our leading positions in global markets leave us well positioned to deliver strong growth when the global economy recovers.”