Australia and other regions report flat performance in first quarter
In a change from recent experience, engine-maker Cummins is looking to North America, Europe and China for income growth as that in other regions, including Australia, underwhelms.
Within international markets for the group, weakness in India, Australia, Mexico and Brazil offset higher revenues in China and Europe.
North American revenues rose 25 per cent while international sales were flat compared with the first quarter a year ago, the firm’s quarterly results report shows.
“Increased demand in on-highway markets in North America offset weakness in global mining and power generation markets,” it says of the engines segment that saw an 11 per cent revenue rise to US$2.6 billion (A$2.8 billion).
Group quarterly net profits were $338 million, compared with last year’s first quarter of $282 million.
Engine arm earnings before interest and tax were $269 million, up from last year’s $195 million.
Heavy and medium-duty vehicle engine sales were up from $654 million and $448 million to $774 million and $601 million respectively, with the story relatively similar for comoponents.
“We delivered good incremental margins in the first quarter as demand in on-highway markets in North America improved,” Chairman and CEO Tom Linebarger states.
“We are also well on track to deliver the expected benefits from our North American distributor acquisitions as we execute our plans and end market demand improves. Conditions in a number of international markets remain very weak, particularly in India and Australia, leading to lower demand for power generation and mining equipment.
“We continue to release exciting new products that will drive future profitable growth and we repurchased 3 million shares in the first quarter, consistent with our commitment to return 50 percent of full year operating cash flow to shareholders through a combination of dividends and share repurchase.”