Cummins third-quarter engine sales dropped to $2.5 billion, down 1 percent from the same period in 2012. The company cites lower demand in mining, stationary power and light duty on-highway products in the U.S. as contributing to the lower revenues. Demand for medium-duty truck engines increased in North America and Brazil.
Engine earnings before interest and taxes (EBIT) was $272 million, or 10.9 percent of sales, compared to EBIT of $239 million, or 9.5 percent of sales in 3Q 2012.
"The company increased gross margins in the third quarter primarily due to the benefits of our cost reduction initiatives. Material cost savings, productivity gains and lower warranty expenses all contributed to the improvement," said Tom Linebarger, Cummins chairman and CEO. "Revenues were below our expectations as we continue to face an environment of weak demand for capital goods in most of our major markets. Our focus on lowering costs in all parts of our business positions us well to deliver strong earnings growth as market conditions improve."
Overall, Cummins reported revenues of $4.3 billion, up 4 percent from 3Q 2012. North American revenues increased 11 percent, while international revenues decreased 4 percent. Growth in China and Brazil was offset by weaker demand in India, Australia and Europe.
Components and distribution sales were both up from 3Q 2012, reaching $1.1 billion (14 percent increase) and $944 million (2 percent increase) respectively. Power generation sales declined 13 percent, to $712 million.
The full-year outlook was revised, with sales expected to be down 3 percent compared to 2012 and a full-year EBIT to be in the range of 12.5 to 13 percent of sales. The company previously expected revenues to be flat, with an EBIT in the range of 13 to 14 percent.