Cummins Sales Beat Expectations, Powered by International Demand

By Allison Prang Features Dow Jones Newswires

Robust demand from overseas customers helped Cummins Inc. deliver sales ahead of analysts' expectations in its latest quarter, as the manufacturer also raised its target for full-year revenue.

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The Indiana engine and heavy-equipment components maker Tuesday reported net sales of $5.29 billion, an increase from $4.19 billion a year ago. Analysts were expecting sales of $4.79 billion.

New products sold in India and higher demand for trucks in China helped fuel sales growth in the company's components segment, rising 34% to $1.5 billion. Sales from Cummins's engine segment--the company's largest--rose 26% to $2.34 billion.

The fact that sales were higher than predicted is "common in machinery this quarter," said Rob Wertheimer, a machinery analyst for Melius Research.

Shares fell 2.6% in morning trading. Cummins recorded a $29 million charge in the quarter from engine repairs after some systems didn't pass emissions tests because of problems with "an aftertreatment component."

The company said it is working on the problems with both the Environmental Protection Agency and California Air Resources Board, but doesn't anticipate penalties or fines from either agency.

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However, the company said it is evaluating other engine systems from multiple model years because of similar issues.

Cummins reported net income of $453 million in the quarter, up from $289 million a year ago. Earnings per share were $2.71, up from $1.72 last year.

The company now predicts revenue for the year to grow between 14 and 15%. It had previously predicted growth of 9 to 11%.

Cummins has been active in acquiring or shedding businesses that meet its growth ambitions in the power space.

In October, it announced plans to buy battery maker Brammo Inc. and fold the company into its recently formed electrification business. The purchase comes after Cummins in August revealed a demonstration model of an urban hauler tractor with an electric powertrain.

It closed a deal in July to form a joint venture with Eaton Corp. to develop automated transmissions for heavy- and medium-duty commercial vehicles

Cummins also recently closed a deal to sell its mobile rental generator fleet to United Rentals Inc.

Write to Allison Prang at allison.prang@wsj.com

(END) Dow Jones Newswires

October 31, 2017 12:08 ET (16:08 GMT)