In the first quarter of 2014, Cummins reported revenue of $4.4 billion, representing a 12 percent increase from the same period in 2013. North American revenues rose 25 percent. Net income attributable to Cummins was $338 million, compared to $282 million in the first quarter of 2013.
Sales in the engine segment rose 11 percent, to $2.6 billion, due to increased demand in on-highway markets in North America offsetting weakness in the global mining and power generation markets. Segment EBIT was $269 million, or 10.5 percent of sales, compared to $195 million or 8.5 percent of sales.
The components segment’s sales increased 21 percent from the first quarter of 2013, to $1.2 billion. Segment EBIT was $167 million, or 13.6 percent of sales, compared to $119 million or 11.7 percent of sales. The company attributes this to higher demand in on-highway markets in North America, Europe and China offsetting weaker demand in Brazil.
Sales in the power generation segment declined 14 percent from a year earlier, to $639 million due to lower revenues in most of the markets but particularly in India, North America and Asia Pacific. Segment EBIT was $25 million, or 3.9 percent of sales, compared to $51 million or 6.8 percent of sales.
The distribution segment’s sales rose to $950 million, representing a change of 22 percent overall and 1 percent excluding acquisitions. Segment EBIT was $76 million, or 8 percent of sales, compared to $95 million or 12.2 percent of sales, with currency being the largest driver of the reduction in earnings. Higher revenues were primarily driven by acquisitions and stronger demand for parts and service in the North American and Asia Pacific regions.
"We delivered good incremental margins in the first quarter as demand in on-highway markets in North America improved. We are also well on track to deliver the expected benefits from our North American distributor acquisitions as we execute our plans and end market demand improves. Conditions in a number of international markets remain very weak, particularly in India and Australia, leading to lower demand for power generation and mining equipment," said Chairman and CEO Tom Linebarger. "We continue to release exciting new products that will drive future profitable growth and we repurchased 3 million shares in the first quarter, consistent with our commitment to return 50 percent of full year operating cash flow to shareholders through a combination of dividends and share repurchase."
Based on the current forecast, Cummins expects full year 2014 revenues to grow between 6 and 10 percent, up from its previous forecast of growth of between 4 and 8% percent due largely to improving demand in North America. EBIT is expected to be in the range of 12.75 to 13.25 percent of sales.