Cummins expects higher profits in 2002

Engine maker Cummins Inc., based in Columbus, IN, expects improved profits next year despite projections for essentially flat revenues. "Continuing efforts to reduce costs will enable Cummins to achieve a profitability improvement over 2001 with little to no improvement in revenue," said Tim Solso, chairman & CEO of Cummins. Based on recently completed plans, Cummins said it is forecasting pre-tax profits in the range of $155 million to $165 million in 2002, with net earnings of $35 million to $45 million. "The completion of our restructuring actions combined with indirect and direct material cost initiatives and Six Sigma improvement projects will result in a net savings of $75 million," said Solso. He added that despite depressed market conditions around the world, Cummins expects to be modestly profitable in the fourth quarter of 2001. The company is anticipating revenues for the first quarter of 2002 to be equal to revenues achieved in the first quarter this year.However, Solso said cost reduction efforts will improve pre-tax profits in the first quarter of 2002 by approximately $25 million over the first quarter of 2001 to a range of $15 to $20 million. Though Cummins expects to post an after-tax loss of approximately $.20 per share in the first quarter of 2002, the remainder of the year is expected to be profitable, Solso said. Solso also said that Cummins’ diesel engine business revenues for 2002 are anticipated to be near 2001 levels. He expects 150,000 new heavy-duty trucks to be built in North America next year.