Cummins has reported results for the fourth quarter of 2019, showing revenues of $5.6 billion, a decrease of 9 percent from the same quarter in 2018. Lower truck production in North America and weaker demand in global construction, mining, and power generation markets drove the majority of the revenue decrease. Currency negatively impacted revenues by 1 percent primarily due to a stronger U.S. dollar.
Fourth quarter sales in North America declined by 8 percent while international revenues decreased by 10 percent led by declines in Europe, Asia Pacific, Latin America, and India.
Earnings before interest, taxes, depreciation and amortization (EBITDA) in the fourth quarter were $563 million (10.1 percent of sales), compared to $896 million a year ago.
“After a strong start to 2019, demand declined across most geographies and end markets in the second half of the year,” said Tony Satterthwaite, president and COO. “We moved quickly to align costs with the weaker global outlook, executing a number of actions which we expect to yield annual savings of $250 to $300 million.”
The company executed several measures to reduce costs and improve future performance in the second half of 2019. These actions included a plan to reduce headcount, which resulted in a charge of $119 million in the fourth quarter.
Net income attributable to Cummins in the fourth quarter was $300 million, or $390 million excluding restructuring, compared to $579 million in 2018.
Revenues for the full year were $23.6 billion, 1 percent lower than 2018.
Revenues in North America increased 3 percent and international sales declined 6 percent led by lower demand in Europe and India.
Net income attributable to Cummins for the full year was $2.3 billion, compared to net income of $2.1 billion in 2018. The tax rate for the full year was 20 percent.
“Despite challenging conditions in many of our largest markets over the last six months, Cummins delivered record profits and operating cash flow in 2019,” said chairman and CEO Tom Linebarger. “The actions we have taken to reduce costs will mitigate a further slowdown in 2020 and position the Company for stronger performance when market demand improves. We will continue investment in new technologies and products in 2020 to generate strong growth and profitability for the company in both the near and long term, which is consistent with how we have managed through prior cycles.”
The company returned a record $2 billion to shareholders in the form of dividends and share repurchases.
