Cummins revenues fell 16% in 2020

Cummins saw its revenues grow in the fourth quarter of 2020, but it wasn’t enough to avoid a 16% decline for the year.

Fourth quarter revenues of $5.8 billion increased 5% from the same quarter in 2019. Sales in North America were flat while international revenues increased 12%, driven by strong demand in China truck and construction markets as well as the growth in new product sales in India. Net income for the fourth quarter was $501 million compared to $390 million, excluding restructuring in 2019.

Revenues for the full year were $19.8 billion, 16% lower than 2019. Sales in North America declined 21% and international revenues fell 7% percent. Sales declined in all major regions except China, where demand for trucks and construction equipment reached record levels.

“We faced many challenges in 2020 driven by the severe global impact of the COVID-19 pandemic.” said Chairman and CEO Tom Linebarger. “I want to thank all of our employees for their dedication to our company and our customers as they adjusted to the unprecedented slowdown in the global economy and then responded as demand accelerated sharply in the second half of the year, all while facing significant disruption to their daily routines at work and home.”

Net income attributable to Cummins for the full year was $1.8 billion compared to net income of $2.4 billion excluding restructuring in 2019.

2021 Outlook

Based on the current forecast, Cummins projects full year 2021 revenues to be up 8 to 12% and expects revenues to increase in all regions and major markets except China where the company sees demand moderating. after a record year in 2020.

“Current indicators point to improving demand in a number of key regions and markets in 2021,” said Linebarger. “However, significant uncertainty remains, requiring continued strong focus on managing costs and cash flow as our markets continue to recover around the world.

“We are still operating under a pandemic with extreme safety measures in place and our suppliers and customers are doing the same. This is presenting challenges to global supply chains as our industry responds to rising demand across multiple end markets. Having effectively managed through an extremely challenging 2020, Cummins is in a strong position to keep investing in future growth while continuing to return cash to shareholders.”

Fourth quarter 2020 details vs. 2019

Engine Segment: Sales were $2.3 billion, up 2%. On-highway revenues increased 1% and off-highway revenues rose 4%. Sales were flat in North America but increased 8% in international markets primarily due to increased demand in China and India.

Distribution Segment: Sales were $2.0 billion, down 2%. Revenues in North America fell 7% percent while international sales increased 8%. The company saw increased demand in power generation markets offset by declines in parts and service.

Components Segment: Sales were $1.8 billion, up 18%, while revenues in North America increased 1% and international sales skyrocket 40% due to higher demand in China and India.

Power Systems Segment: Sales were $989 million, down 6%. Power generation revenues decreased by 2% while industrial revenues fell 12% due to lower demand in mining and oil and gas markets

New Power Segment: Sales were up 89% to $34 million. Revenues increased due to greater demand in transit and school bus markets, along with 29 MW of electrolyzer projects commissioned. Costs associated with the development of fuel cells and electrolyzers as well as products to support battery electric vehicles contributed to an EBITDA loss of $51 million.