Cummins reported fourth-quarter and full-year results for 2013, citing a 7 percent increase in 4Q revenue and a flat full year revenue year-over-year.
Fourth Quarter Results
Fourth quarter revenue was $4.6 billion. The company attributes the year-over-year increase was driven by higher revenues in North America, China and Brazil partially offset by weaker sales in Mexico, India and Australia.
Earnings before interest and taxes (EBIT) were $566 million for the fourth quarter or 12.3 percent of sales. This compares to $532 million or 12.4 percent of sales in 2012, excluding restructuring costs.
Net income attributable to Cummins in the fourth quarter was $432 million ($2.32 per diluted share), compared to $404 million ($2.14 per diluted share) in the fourth quarter of 2012 excluding restructuring charges. The effective tax rate in the fourth quarter of 2013 was 15.7 percent and reflects one-time benefits of $0.18 per diluted share, and a lower than expected operating rate in the fourth quarter that contributed $0.20 per diluted share.
Sales in the engine segment for the fourth quarter totaled $2.6 billion, up 2 percent from 2012. Strong demand for construction equipment in international markets and increased demand for medium duty trucks in North America offset weakness in global mining markets and lower demand in the North American bus market.
Components sales were up 21 percent from 2012, to $1.1 billion, while power generation sales decclined 1 percent to $759 million. Distribution sales were $1.1 billion, up 18 percent from 2012.
Full Year 2013 Results
Revenues for the full year were $17.3 billion, flat with 2012. Revenues in North America increased 3 percent but were offset by international sales which declined by 4 percent. Within international markets declines in Mexico, India, Australia and Europe offset growth in China and Brazil.
EBIT for the year was $2.16 billion or 12.5 percent of sales, compared to $2.35 billion or 13.6 percent of sales in 2012, excluding special items.
Net income attributable to Cummins for the full year was $1.48 billion ($7.91 per diluted share), down from $1.68 billion ($8.83 per diluted share) in 2012, excluding special items.
"We faced weak demand in important regions and end markets in 2013," said Tom Linebarger, Chairman and CEO. "Revenues for the year ended flat with 2012 as strong growth in the Components business, market share gains in the North American medium-duty truck market and distributor acquisitions offset weakness in global mining markets, international power generation and the North American heavy-duty truck market. I am pleased that in this environment of weak global growth, we were able to generate record cash flow from operations that allowed us to continue to invest in the business and increase the cash returned to shareholders by 34 percent in 2013. We expect revenues to grow between 4 percent and 8 percent in 2014, with earnings projected to grow faster than revenues and we expect to return to shareholders an amount of at least 50 percent of cash from operations."
Based on the current forecast, Cummins expects full year 2014 revenues to grow between 4 and 8 percent, with EBIT in the range of 12.75 to 13.25 percent of sales.