Cummins Inc. (NYSE: CMI) reported for the second quarter its highest quarterly earnings as a percentage of sales in more than 25 years. Continued productivity improvements in the company’s manufacturing operations, as well as strong performance in international markets, drove significant year-over-year gains across all the company’s business segments.
Earnings Before Interest and Taxes (EBIT) was $401 million, or 12.5 percent of sales, up from $109 million or 4.5 percent of sales in the second quarter of 2009. EBIT also improved from 10.7 percent in the first quarter of 2010. For the first time ever, all four segments posted quarterly EBIT in excess of 10 percent of sales.
Sales of $3.21 billion in the second quarter were 32 percent higher than $2.43 billion in the same quarter in 2009. Net income attributable to Cummins Inc. in the second quarter more than quadrupled to $246 million, or $1.25 a share, compared to $56 million, or $0.28 a share, in the same period a year ago.
The sales gains were led by the company’s Engine and Components segments, which each reported 45 percent sales improvements compared to the same period in 2009. Power Generation sales increased 16 percent, while Distribution sales rose 24 percent. The company delivered these strong results even though the North American heavy duty truck market remains weak as result of the transition to new on-highway emissions standards at the beginning of the year.
Based on the company’s performance in the first half of 2010 and its forecast for the rest of the year, Cummins today increased its financial guidance for 2010. The company now expects to generate EBIT of 12 percent of sales on revenues of $13 billion.
“We had an outstanding quarter,” said Cummins Chairman and Chief Executive Officer Tim Solso. “The work we have done to strengthen our manufacturing operations during the downturn has resulted in significant productivity gains, and we continue to benefit from our leadership position in large and growing international markets such as China, India and Brazil.”
The company’s non- U.S. markets continued to perform well, with sales up 51 percent outside the United States in the second quarter compared to a year ago. Sales outside the U.S. accounted for 64 percent of the company’s revenue in the quarter.