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Cummins Inc. reported a decline in fourth-quarter net income on flat revenue as supply chain constraints continued to present headwinds.
For the quarter ended Dec. 31, Cummins posted net income of $394 million, or $2.73 per diluted share, compared with $501 million, $3.36, last year. Revenue inched up to $5.85 billion compared with $5.83 billion.
“Our industry continues to experience significant supply chain constraints resulting in elevated manufacturing, logistics and material costs resulting in margins below our expectations, particularly in the fourth quarter,” Cummins Chairman and CEO Tom Linebarger said during a Feb. 3 earnings call.
The company’s engine segment, its largest, saw Q4 revenue rise 4% to $2.4 billion, with on-highway segment revenue rising 5% and off-highway revenue up 2%.
Sales in North America decreased 4% while international sales increased 26%, driven by demand across Australia, Europe and Latin America.
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Cummins’ components division saw Q4 revenue slide 6% to $1.7 billion. While segment revenue in North America increased 1%, international sales fell 12% due to lower demand in China.
Revenue for Q4 in the company’s new power segment was flat at $34 million. However, the company expects continued development of fuel cells and electrolyzers, along with products for battery-electric vehicles, to propel future growth.
“The transition to low carbon power across industries will be a significant driver in the fight against climate change and will require a broad mix of innovative technologies to achieve these goals,” Linebarger said. “This decarbonization effort represents a significant growth opportunity for Cummins, as many of our OEM partners and end customers look to achieve their climate goals, while still having power solutions that fulfill their needs.”
The company’s distribution segment — its second largest — notched a 3% gain in Q4 revenue to $2.1 billion. The segment consists of parts and filtration, power generation, engines and service. Revenue in North America was down 1% while international sales increased by 10% driven by strong demand in Russia. Increased engine and aftermarket demand offset a decline in power generation.
The Cummins power systems segment saw Q4 revenue rise 10% to $1.1 billion. The segment provides high-speed engines from 760-4400 horsepower and power generation equipment from 2–3,500 kilowatts, including standby and prime power gen sets, alternators, switchgear and other components.
For 2021, Cummins’ net income increased to $2.1 billion, or $14.61, compared with $1.7 billion, $12.01, last year. Full-year revenue rose 21% to reach a record $24 billion, compared with 2020’s $19.8 billion. Full-year revenue increased in all major regions compared with the prior year, which was severely impacted by the COVID-19 pandemic. For 2021, North American revenue increased 17% and international revenue increased 27%.
Cummins projects a 6% increase for 2022 revenue on increased sales in all regions and major markets except China, where it expects demand to moderate after a record year in 2021.
The Columbus, Ind.-based company produces diesel, natural gas, electric and hybrid powertrains and powertrain-related components including filtration, aftertreatment, turbochargers, fuel systems, controls systems, air handling systems, automated transmissions, electric power generation systems, batteries, electrified power systems, hydrogen generation and fuel cell products.