Cummins Profit, Revenue Top Expectations

By Lisa Beilfuss 

Engine manufacturer Cummins Inc. said second-quarter profit rose 5.6% as demand in North American markets and the benefit of acquisitions offset weakness in Brazil and other foreign markets.

Shares, which have declined nearly 10% in the past three months, rose 4% in premarket trading to $128.75 as both profit and revenue topped analysts' expectations.

The Indiana company backed its outlook for the year, still projecting 2% to 4% revenue growth. That translates to $19.61 billion to $19.99 billion, bracketing the $19.81 billion analysts predict. The affirmed guidance comes despite weak economic conditions in key foreign markets and a stronger U.S. dollar that also is pressuring Cummins' revenue.

For the latest period, Cummins reported earnings of $471 million, or $2.62 a share, up from a year-earlier profit of $446 million, or $2.43 a share.

Revenue grew 3.7% to $5.02 billion. Adverse foreign exchange shaved 4% off the top line, the company said.

Analysts projected $2.55 in per-share profit and $4.94 billion in revenue.

In North America, sales rose 12%, partially offset by a 6% drop in international revenue. Sales in Brazil fell the most, the company said. Cummins, like others, is grappling with a weak Brazilian economy dogged by slow growth and high inflation that is hampering demand for its products.

Cummins's engine segment, its largest, reported a 2% increase in sales as strong demand in North American truck and bus markets countered weaker demand in global industrial markets and lower truck demand in Brazil.

Distribution revenue rose 21%, thanks largely to distributor acquisitions, while components sales increased 9%. In the company's power-generation business, revenue edged 1% higher.

Write to Lisa Beilfuss at [e-mail]

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