Cummins posts record Q2 results despite supply chain issues
US-based producer of marine engines and generators, Cummins has recorded second quarter revenues of $6.6 billion – an increase of 8 per cent on the same quarter in 2021.
Sales in North America increased 15 per cent while international revenues decreased 2 per cent, driven primarily by a slowdown in China and the indefinite suspension of operations in Russia.
“The company achieved record revenues and solid profitability in the second quarter of 2022, with demand for our products remaining strong across most of our key markets and regions, apart from China,” says president and CEO Jennifer Rumsey. “Employees across our organisation have worked tirelessly in the face of supply chain challenges and rising costs that continue to impact our industry. While navigating these challenges, we will continue to focus on enabling our customers’ success, driving cycle over cycle improvement in financial performance, investing in sustainable solutions that will protect our planet for future generations and returning excess cash to shareholders.”
Based on the current forecast, Cummins is maintaining its full-year 2022 guidance, expecting revenue to be up 8 per cent and earnings before interest, taxes, depreciation and amortisation (EBITDA) of approximately 15.5 per cent. The company plans to return approximately 50 per cent of operating cash flow to shareholders in the form of dividends and share repurchases.
“High inflation and rising global interest rates have increased uncertainty about the pace of growth in the global economy. Demand for Cummins’ products and services remains strong, and as a result we have maintained our projection for full year revenues and profitability from three months ago,” says Rumsey.
Net income attributable to Cummins in the second quarter was $702 million ($4.94 per diluted share) compared to $600 million ($4.10 per diluted share) in 2021.
EBITDA in the second quarter were $1.1 billion (16.0 per cent of sales), compared to $974 million (15.9 per cent of sales) a year ago. Second quarter results include costs of $29 million ($0.16 per diluted share) related to the separation of the filtration business, and a $47 million benefit ($0.33 per diluted share) from adjusting the reserves related to the indefinite suspension of the company’s operations in Russia.
Cummins says it also experienced $48 million ($0.34 per diluted share) of mark to market losses on investments that underpin its unqualified benefit plans in the second quarter, which compares to gains of $20 million a year ago. The tax rate in the second quarter was 17.3 per cent including $36 million, or $0.25 per diluted share, of favourable discrete items.
Any expenses outside of the normal course of business associated with the separation of the filtration business, the pending acquisition of Meritor, or indefinite suspension of operations in Russia have been excluded from the outlook provided.
“We continue to monitor economic conditions closely and will adjust our operating plans should the outlook for our core markets weaken,” Rumsey says.