Cummins first quarter results show COVID-19 impact on industry

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Cummins reported its first quarter 2020 results earlier this week.

The company says its first quarter revenues of $5.0 billion decreased 17 percent from the same quarter in 2019. Lower truck production in North America and weaker demand in global construction, mining, and power generation markets drove the majority of the revenue decrease. Additionally, Cummins says currency negatively impacted revenues by 1 percent primarily due to a stronger U.S. dollar.

Sales in North America declined by 16 percent while international revenues decreased by 17 percent, led by declines in Europe, Asia Pacific, Latin America, India, and China.

“We delivered strong profitability in the first quarter, supported by the commitment of our employees to serve our customers and the benefit of cost reduction actions we initiated in the second half of 2019,” says Tom Linebarger, Cummins chairman and CEO. “Amidst the unprecedented COVID-19 pandemic, the health and safety of our employees and the communities in which we operate is our top priority. Our teams are working hard to support the global economy, leveraging our flexibility and strong supplier network to help our customers deliver essential products and support response efforts.

“Given the significant impact the pandemic will have on demand across our industry in the second quarter and beyond, we are continuing to take actions to reduce cost and boost our already strong liquidity,” Linebarger adds.

Cummins says its earnings before interest, taxes, depreciation and amortization (EBITDA) in the first quarter were $846 million (16.9 percent of sales), compared to $1.0 billion (17.2 percent of sales) a year ago. First quarter EBITDA included a $37 million benefit to joint venture earnings resulting from recent changes to tax law in India.

In its engine segment, Cummins says sales were $2.2 billion, down 19 percent compared to last year. On-highway revenues decreased 17 percent and off-highway revenues decreased 23 percent. In its distribution segment, sales were down 9 percent to $1.8 billion; the company’s components segment was down 19 percent to $884 million.

“During our 100-year history, we have encountered several unforeseen crises, and I am confident we will successfully navigate this one as we have done before, to emerge stronger,” says Linebarger. “Cummins enters this period of uncertainty in a position of strength with an experienced leadership team that has led through multiple cycles and a strong balance sheet. Our deep customer and supplier relationships combined with our leading positions in global markets leave us well positioned to deliver strong growth when the global economy recovers.”

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