Cummins Inc. reported a sharply higher fourth-quarter net profit today (Feb. 9), but revenue fell as the engine maker said difficult market conditions could hurt 2017 results.
The Columbus, Ind.-based company said cost-cutting helped mitigate the impact of lower North American commercial truck production and weak global demand for its engines and power-generation equipment.
Cummins reported net income of $378 million, or $2.25 per share, more than double $161 million, or 92 cents per share, a year earlier. Revenue fell to $4.5 billion from $4.8 billion.
For the full year, revenues were $17.5 billion, 8% lower than 2015. Sales in North America decreased 12% and international sales decreased 2% mainly due to foreign currency movements. Excluding the impact of the currency movements, international revenues increased 2% with growth in China and India being offset by weaker demand in Latin America, the Middle East and Africa.
Net income for the full year was $1.39 billion, or $8.23 per share, compared to $1.4 billion, or $7.84 per share, in 2015.
“Despite weak conditions in a number of our largest markets, Cummins delivered fourth quarter results that were a little better than expected due to our strong market share in on-highway markets in North America and the benefits of our cost reduction work,” said Tom Linebarger Chairman and CEO. “We made significant progress in a number of our key initiatives in 2016, including executing our restructuring actions, completing the acquisition of our distributors in North America and continuing to invest in new products, all of which help position the company for profitable growth when markets improve. We also returned 75% of the company’s operating cash flow to shareholders, consistent with our plan for the year.”
The company said 2017 would remain challenging, with revenue likely to be flat to down 5% and earnings before taxes to be between 11% and 11.5% of sales.
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