COLUMBUS, Ind.– Cummins completed a record 2005 with its most profitable quarter ever, driven by continued strength in its engine segment, record performance from its distribution and power generation segments and growth in major markets around much of the world.
For all of 2005, Cummins reported profits as measured by earnings before interest and taxes (EBIT) of $907 million, a 67 per cent increase from 2004. Sales increased 18 per cent to $9.92 billion, from $8.44 billion in 2004.
Net income for 2005 was $550 million, or $11.01 a share, up 57 per cent from $350 million ($7.39 a share) in 2004. The company’s strong operating performance in 2005 allowed it to improve its cash position by $168 million, while also reducing net debt by $259 million.
In the fourth quarter of 2005, Cummins sales increased 17 per cent to a record $2.75 billion from $2.35 billion in the same period in 2004. Net income rose 40 per cent in the fourth quarter to $167 million, or $3.31 share, from $119 million, or $2.41 per share, during the same period in 2004.
Cummin’s EBIT for the fourth quarter of 2005 of $269 million- or 9.8 percent of sales- were 56 per cent higher than the same period in 2004. All four Cummins operating segments posted revenue and segment EBIT increases.
“Our results for both the fourth quarter and all of 2005 are outstanding,” said Cummins CEO, Tim Solso. “This performance is evidence that we are transforming Cummins into a less cyclical, more diversified company while converting a larger percentage of sales into profit.”
“As good as the last two years have been, we are expecting 2006 to be more profitable, even if growth in our end markets moderates,” Solso added. “We have significant opportunities as a result of our product mix, our leading position in many of the markets we serve, our global network of plants, technical centers, distributors and first-rate partners as well as our commitment to being a low-cost producer.”
Based on its current plans and forecasts, the company expects to earn between $2.50 and $2.60 a share in the first quarter and between $11.90 and $12.10 a share for all of 2006.
The company’s North American engine business remains very strong, but international sales growth was even better in 2005. For all of 2005, international sales represented 51 per cent of the company’s total consolidated sales and 55 per cent in the fourth quarter.
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