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Cummins Inc. posted lower net income and revenue in the third quarter as demand fell for trucks and construction equipment.
Net income for the period, ended Sept. 30, dropped to $622 million, or $3.97 per diluted share, compared with $692 million, or $4.28, a year earlier.
Third-quarter results were positively impacted by $23 million, or 14 cents, in discrete tax items and gains of $28 million, or 18 cents, from closing out certain derivative contracts associated with the company’s foreign exchange hedging program.
In addition, third-quarter net income included expenses of $35 million, or 23 cents, related to one-time actions taken to cease development and production of certain products, which will benefit future financial performance, the Columbus, Ind.-based company reported.
Revenue fell to $5.76 billion compared with $5.94 billion in the 2018 period.
Sales in North America were flat, while international revenue decreased 8%. Currency had a negative impact on revenue by 1%, due to a stronger U.S. dollar.
“Despite weakening conditions in a number of our largest markets, Cummins delivered strong profits, record operating cash flow and returned a record $910 million of cash to shareholders in the third quarter,” Chairman and CEO Tom Linebarger said.
“While we expected to see a moderation of demand in the second half of the year, sales have weakened even faster than we anticipated,” Linebarger said. “Cummins is taking actions to align our cost structure with the lower revenues while maintaining investment in products that will deliver sustainable growth and profitability.”
In its engine segment, on-highway revenue decreased 9% and off-highway revenue decreased by 20%. North America revenue decreased by 6% due to lower demand in heavy-duty truck and construction markets while international revenue declined 25% primarily due to lower demand in China.
In the quarter, the company highlighted its new 2020 X15 Efficiency Series engine will meet 2021 greenhouse gas standards one year early in North America, delivering up to 5% better fuel economy than the prior X15 Efficiency Series. It is paired with a 12-speed Cummins Eaton Joint Venture automated manual transmission.
Also, Cummins closed on its previously announced acquisition of fuel cell and hydrogen production technologies provider Hydrogenics Corp. The acquisition was completed for $15 per share, representing an enterprise value of $291 million.
The first Cummins-powered battery electric bus entered service in Santa Monica, Calif.
Cummins and Freightliner announced the increased availability of the Cummins X12 engine. The X12 will be available in a Freightliner Cascadia day cab in 2020. This is the first time the X12 will be utilized in regional haul applications in North America. The X12 combined with the Cummins Eaton Joint Venture transmission delivers substantial value to weight sensitive customers as it is the lightest powertrain available for the Class 8 on-highway market, weighing only 2,700 pounds.
And, Cummins was named to the Dow Jones Sustainability North American Index for a 14th consecutive year.
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