- Second quarter revenues of $5.1 billion, GAAP1 Net Income of $424 million
- EBIT of 12.2 percent of sales, Diluted EPS of $2.53
- The company expects stronger sales growth with full year 2017 revenues to be up 9 to 11 percent, compared to prior guidance of up 4 to 7 percent
- EBIT expected to be in the range of 11.75 to 12.5 percent, unchanged from prior guidance
Cummins reported results for the second quarter of 2017 with revenues of $5.1 billion increasing 12 percent from the same quarter in 2016. Higher demand for trucks and construction equipment in North America and China, and stronger sales to mining, and oil and gas customers were the main drivers of revenue growth.
Currency negatively impacted revenues by approximately 1 percent compared to last year, primarily due to the appreciation of the U.S. dollar. Revenues in North America increased 13 percent and international sales grew 11 percent due to strong demand in China and India.
Net income attributable to Cummins in the second quarter was $424 million compared to $406 million in the same quarter a year ago. The tax rate in the second quarter of 2017 was 26.4 percent.
Earnings before interest and taxes (EBIT) was $620 million, or 12.2 percent of sales, compared to $591 million or 13.1 percent of sales a year ago.
“We delivered strong revenue growth in all four operating segments in the second quarter due to improving conditions in a number of important markets where we also have leading share. Earnings increased due to solid operational performance, partially offset by higher warranty costs that resulted in second quarter EBIT that was below our expectations” said Chairman and CEO Tom Linebarger. “As a result of stronger than expected orders in truck and construction markets in North America and China, and improving demand from global mining customers we have raised our 2017 full year outlook.”
Cummins and power management company Eaton have successfully completed the formation of the Eaton Cummins Automated Transmission Technologies joint venture that was announced on April 10.
Cummins and Eaton each own 50 percent of the global joint venture which will design, manufacture, sell and support all future medium-duty and heavy-duty automated transmissions for the commercial vehicle market. Eaton’s current medium-duty automated transmission, Procision, and next generation heavy-duty automated transmissions, will be part of the business which will also market, sell, and support Eaton’s current generation of automated heavy-duty transmissions to OEM customers in North America.
Today marks the first day of operations for the joint venture and the financial results will be consolidated within Cummins’ Components Segment.
Based on the current forecast, EBIT is expected to be in the range of 11.75 to 12.5 percent of sales, unchanged from prior guidance. This forecast excludes the impact of the company’s new Eaton Cummins Automated Transmission Technologies joint venture.