Cummins Profits Rising; CEO Sees More Growth

OLUMBUS, Ind. — Diesel engine maker Cummins Inc. expects to follow 2005’s record earnings with another strong year, forecasting revenues 8% to 10% higher and increased per-share earnings, Tim Solso, the company’s chairman and chief executive officer, told the annual shareholders’ meeting.

“I’ve never seen the business as strong as it is now,” Solso told the group here May 9.

For its first quarter, Cummins earned $135 million or $2.70 a share. It recently raised its 2006 per-share earnings guidance from $12.40 to $12.60 and shares hit a 52-week high last week on the New York Stock Exchange, trading above $116 on May 11.

Solso also revealed the new 13-liter engine Cummins is developing in China with its partner, Dongfeng, “can be exported to international markets, including North America.”

Asked after the meeting if Cummins planned to sell the new China-made engine here, Solso said, “We haven’t made any decision to bring it into the U.S.,” but added, “It will be capable of meeting EPA standards.”

While most heavy-duty truck suppliers have invested in China, none have yet said it will export any of the products produced in that fast-growing Asian market to the United States or Europe.

Cummins, Solso said, currently has 16 business ventures underway in China and 10 in India, another major developing market for truck makers. International sales already account for more than half of the company’s sales, officials said.

Solso also assured his stockholders that Cummins is “much better positioned” for the introduction of the new generation of heavy-duty diesel engines in 2007 than it was for a similar rollout in 2002, which roiled the truck-supply industry as fleets drastically cut their purchases of the new models.

While much of the trucking industry has expressed concern over an expected steep decline in new-truck sales in 2007 — following another huge pre-buy of existing models that has virtually exhausted all of the production of every U.S. truck maker for 2006 — Solso moved to reassure stockholders the company is ready.

“This [2007’s rollout] is a one-time, discrete event that may affect Cummins for one to two quarters,” he said. But the company has restructured since 2001, having sharply reduced its costs, increased productivity and shifted its product lines to make its business less cyclical.

He said Cummins was now “the emissions leader. We are meeting emissions requirements all over the world. I can’t emphasize how ready we are today” to meet the 2007 emissions standards set by the Environmental Protection Agency that has forced the introduction of the new models.

The same day as the shareholder’s meeting, Cummins rolled out a rebranding campaign to unite its disparate worldwide businesses under a single Cummins banner — one with a new color scheme.

The company has decided to jettison its blue “C” logo for a black one and has adopted black and red as the official company colors. Customers will see the new logos on products and outside dealerships and distributors over the next 12 to 18 months, officials said.

Tom Kieffer, the company’s executive director for customer support, headed an internal team that created the rebranding campaign. He said all of Cummins’ divisions “will now have the Cummins name and colors.”

he process began in August, Kieffer said, and is expected to be “a 12-to-18-month journey” before all the brands are united.

This story appears in the May 15 print edition of Transport Topics. Subscribe today.