Cummins Inc. reported results for the second quarter of 2014, indicating a 7 percent increase in revenue from 2Q 2013.
Second quarter revenue totaled $4.8 billion. The increase year-over-year was driven by stronger demand in on-highway markets and distributor acquisitions in North America.
Revenues in North America increased 14 percent while international sales decreased 1 percent compared to the second quarter a year ago. Within international markets, lower revenues in Mexico, Brazil and India offset stronger demand in China.
Earnings before interest and taxes (EBIT) were $657 million for the second quarter or 13.6 percent of sales. This compares to $621 million or 13.7 percent of sales a year ago. Net income attributable to Cummins in the second quarter was $446 million ($2.43 per diluted share), compared to $414 million ($2.20 per diluted share) in the second quarter of 2013.
"Demand is growing in on-highway markets in North America this year as the economy improves and we have gained market share in medium duty truck and bus markets. Our Components business delivered very strong results in the second quarter generating record sales and profits," said Chairman and CEO Tom Linebarger. "Earlier this month we raised the quarterly dividend by 25 percent and the board of directors also approved a new $1 billion share repurchase program, consistent with our commitment to return 50 percent of operating cash flow to shareholders and reflecting our confidence in the company's future."
Based on the current forecast, Cummins expects full year 2014 revenues to grow between 8 and 11 percent, up from its previous forecast of growth of between 6 and 10 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.
Engine segment sales totaled $2.7 billion, up 3 percent from 2Q 2013. The segment EBIT were $311 million, or 11.3 percent of sales, compared to $339 million or 12.8 percent of sales in 2Q 2013. Increased demand in on-highway markets in North America offset weakness in global power generation and the Brazilian truck market
Components segment sales totaled $1.3 billion, up 15 percent from 2Q 2013. Segment EBIT were $185 million, or 14.5 percent of sales, compared to $136 million or 12.2 percent of sales in 2Q 2013. Higher demand in on-highway markets in North America, Europe and China more than offset weaker demand in Brazil.
Power Generation segment sales were $743 million, down 9 percent from 2Q2013. Segment EBIT were $61 million, or 8.2 percent of sales, compared to $76 million or 9.3 percent of sales. Lower revenues in most markets particularly North America, Asia Pacific and Middle East offset stronger demand in China and Africa.
Distribution segment sales totaled $1.2 billion, up 30 percent overall and up 2 percent excluding acquisitions from 2Q 2013. Segment EBIT were $126 million, or 10.2 percent of sales, compared to $100 million or 10.5 percent of sales. Higher revenues were primarily driven by acquisitions and stronger demand in North America and Africa.