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Cummins Inc. reported higher earnings and revenue in the fourth quarter amid gains in both its engines and components business segments in China and India.
Net income for the quarter ended Dec. 31 was $501 million, or $3.36 per diluted share, compared with $300 million, or $1.97, a year earlier.
Revenue in the quarter rose to $5.8 billion compared with $5.6 billion.
“We faced many challenges in 2020 driven by the severe global impact of the COVID-19 pandemic,” CEO Tom Linebarger said. “I want to thank all of our employees for their dedication to our company and our customers as they adjusted to the unprecedented slowdown in the global economy and then responded as demand accelerated sharply in the second half of the year, all while facing significant disruption to their daily routines at work and home.”
In the engines segment, quarterly revenue rose to $2.3 billion, up 2% compared with a year earlier. On-highway revenue increased 1% and off-highway revenue increased 4%.
Sales were flat in North America but increased 8% in international markets primarily due to increased demand in China and India, the Columbus, Ind.-based company reported.
In the quarter, heavy-duty engine sales were $789 million compared with $755 million a year earlier.
Medium-duty truck and bus sales were $565 million compared with $602 million in the 2019 period.
The company shipped 27,500 heavy-duty engines in the quarterly period compared with 25,700 a year earlier.
Medium-duty shipments were 64,700 compared with 64,800 a year earlier.
“CMI handily beat our and consensus estimates,” Cowen analyst Matthew Elkott wrote in a note. “Heavy-, medium-, and light-duty engine shipments beat significantly, although we continue to believe a NA Class 8 cycle pull-forward effect was a tailwind in 2020. Guidance was largely in line with street expectations, but we note that management tends to be on the conservative side.”
Looking ahead, Cummins noted it expects revenue to increase in all regions and major markets except China where it expects demand to moderate after a record year in 2020.
“Current indicators point to improving demand in a number of key regions and markets in 2021,” Linebarger said. “However, significant uncertainty remains, requiring continued strong focus on managing costs and cash flow as our markets continue to recover around the world. We are still operating under a pandemic with extreme safety measures in place and our suppliers and customers are doing the same.”
“This is presenting challenges to global supply chains as our industry responds to rising demand across multiple end markets. Having effectively managed through an extremely challenging 2020, Cummins is in a strong position to keep investing in future growth while continuing to return cash to shareholders,” he said.
The company plans to return 75% of operating cash flow to shareholders in the form of dividends and share repurchases.
Cummins cited as among its 2020 highlights:
- In response to the COVID-19 pandemic, the company used its filter technology to provide 146 tons of filtration media to mask manufacturers across the globe, which has been used to produce more than 108 million masks.
- It established a joint venture called NPROXX to provide hydrogen storage tank solutions to customers in multiple applications including rail, truck, bus, and other on-highway uses to advance the adoption of hydrogen-based technologies.
For the full year, net income was $1.7 billion, or $12.01, compared with $2.2 billion, or $14.58, in the 2019 period.
Revenue fell to $19.8 billion compared with $23.5 billion a year earlier.
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