This is the exact same story as Caterpillar (CAT), Eaton (ETN), and a host of other industrials - overseas sales, especially of the emerging kind off the charts... American business "meh". Cost cutting drives profits, and we all win - as long as we are not American labor of course. ;) CMI is now getting close to IBM status where roughly 2/3rds of revenue is foreign based.
Analysts were in for $1.41 on $3.56B in revenue. Excluding a settlement in Brazil of 11 cents, Cummins delivered $1.33. Still should be on track for just under $5 EPS for the year so forward PE of about 18, putting it at valuations near Eaton, and below Caterpillar.
Of the 4 business lines, the results were sharp across the board; engines are about half the business:
- Engine +44% revenue
- Power Generation +44%
- Components +30%
- Distribution +36%
[full report here]
- Engine and generator maker Cummins Inc. said on Tuesday that its third-quarter profit nearly tripled, but its per-share profit and revenue both came in short of analyst expectations.
- The company earned $283 million, or $1.44 per share, for the quarter that ended Sept. 26. That was up from $95 million, or 48 cents per share, during the quarter that ended Sept. 27, 2009. Revenue rose 34.4 percent to $3.4 billion, from $2.53 billion a year earlier.
- The third-quarter profit was boosted by an after-tax benefit of $21 million, or 11 cents per share, for a favorable legal ruling in Brazil. On that basis, its profit was 8 cents per share short of the $1.41 per share expected by analysts surveyed by Thomson Reuters. Analysts expected revenue of $3.6 billion.
- The company said its increased profit and revenue were due to strong overseas sales, which rose 56 percent from a year earlier. Non-U.S. revenue accounted for 63 percent of its revenue.
- Sales in its engine segment rose 44 percent to $2.1 billion. Power generation sales were up 44 percent to $791 million.
- Cummins said the North American truck engine market continued to be weak because of federal emissions changes and a slow economic recovery in the U.S. It predicted 2010 revenue of $13 billion. Analysts were expecting almost $13.2 billion.
- (CEO) “In addition to a number of favorable long-term trends that we have discussed over the past year, we are preparing for growth in many of our markets outside the United States next year.”
- Cummins affirmed its 2010 sales target of $13 billion and raised its margin forecast to 12.5% from 12%, citing stronger performance in its power generation and distribution segments.
- "Components looked like a bit of a disappointment," said Ann Duignan, an analyst at JPMorgan Chase. She said the problem appeared to be both lighter-than-expected sales at the unit and single-digit margins that were "worse than expected.'
- The company did not mention specific geographies, but said sales were strong in emerging markets where commodity prices are driving a mining boom.
[Jul 27, 2010: Cummins Demolishes Estimates]
[Sep 23, 2007: Stock to Watch: Cummings Hitting on all Cylinders]
[Feb 11, 2009: WSJ - Cummins Engine Shifts Gears Amid Stall]