Diesel engine maker Cummins, Inc. (CMI: Quote) reported Tuesday a profit for the second quarter that decreased from last year, which included a gain on sale of business. Stripping down the gain, adjusted earnings per share grew and topped analysts' expectations as the company continued to deliver strong margins despite challenging economic environment.
Quarterly revenues declined 4 percent and missed Street estimates. The company also maintained its sales forecast for the full-year 2012 which it had lowered earlier in the month.
Earlier in the month, Cummins increased its quarterly cash dividend on common stock by 25 percent to $0.50 per share, payable on September 1 to shareholders of record on August 22, 2012.
"The Company continued to deliver strong profits despite the weakening global economic conditions. Second quarter gross margins were at record levels as we continue to drive improvements in productivity and quality," Chairman and CEO Tom Linebarger said in a statement.
The Columbus, Indiana-based company reported net income of $469 million or $2.47 per share for the second quarter, lower than $505 million or $2.60 per share in the prior-year quarter.
Excluding gains from divestitures, adjusted net income for the quarter grew to $2.45 per share from $2.41 per share in the year-ago quarter.
On average, 18 analysts polled by Thomson Reuters expected the company to earn $2.28 per share for the second quarter. Analysts' estimates typically exclude special items.
Sales for the quarter declined 4 percent to $4.45 billion from $4.64 billion in the same quarter last year, and missed fourteen Wall Street analysts' consensus estimate of $4.47 billion.
Excluding the impact of divestitures and currency movements, revenues were flat year-over-year, with growth in North America offsetting weakness in international markets, particularly China and Brazil.
Sales for the engine segment decreased 2 percent from a year ago to $2.8 billion, while distribution sales increased 1 percent to $794 million from last year. Components sales remained flat with last year at $1.0 billion, and power generation segment sales also remained flat with last year at $909 million.
"Looking forward, as the global economy improves, our growth opportunities remain strong," Linebarger added.
Looking ahead to fiscal 2012, Cummins maintained its revenue forecast of $18 billion, while Street is currently looking for revenues of $18.12 billion.
The company had earlier in the month lowered the forecast from a 10 percent growth to $19.84 billion from last year, citing weak demand in "some markets" amidst slow global economy growth. he company had said then that revenues are expected to be in line with fiscal 2011 sales of $18.05 billion.
CMI closed Monday's regular trading session at $90.48, down $1.78 on a volume of 2.61 million shares.
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by RTT Staff Writer
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