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Cummins profit doubles as cost-cutting offsets lower revenue
February 9, 2017 / 12:50 PM / 9 months ago

Cummins profit doubles as cost-cutting offsets lower revenue

CHICAGO (Reuters) - Cummins Inc (CMI.N) reported a sharply higher fourth-quarter net profit on Thursday, but revenue fell, and the engine maker said difficult market conditions could hurt 2017 results.

The Columbus, Indiana-based company said cost-cutting helped mitigate the impact of lower North American commercial truck production and weak global demand for its engines and power-generation equipment.

In light pre-market trading Cummins shares were up 3.4 percent at $150.65.

“Despite weak conditions in a number of our largest markets ... (we) made significant progress in a number of our key initiatives in 2016,” Chief Executive Officer Tom Linebarger said in a statement.

The company said 2017 would remain challenging, with revenue likely to be flat to down 5 percent and earnings before taxes to be between 11 percent and 11.5 percent of sales.

Results for the current quarter “will continue to be challenged by difficult markets and are expected to mark the low point of the year,” the company said.

Cummins reported net income of $378 million, or $2.25 per share, more than double $161 million, or 92 cents per share, a year earlier.

Excluding impairment and restructuring charges, earnings per share were $2.02. Analysts had on average had expected $1.99.

Revenue fell to $4.5 billion from $4.8 billion. Analysts had expected $4.34 billion.

The company managed to offset those lower sales with a reduction in costs. A year earlier, Cummins had also reported restructuring and impairment charges due to weak markets, which had hurt profits.

Reporting by Nick Carey; Editing by Bernadette Baum

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