Off-road engine manufacturer Cummins reports revenue of US$6.1 billion in the second quarter of 2021, up 59 per cent on the same quarter last year.
Strong demand across many of Cummins key markets drove continued sales. In North America, the company’s home market, sales increased by 74 per cent. Meanwhile, international revenues increased 42 per cent, driven by strong demand across all global markets compared to the same quarter in 2020, which was impacted significantly by the pandemic.
Currency positively impacted sales by 3 per cent, primarily due to a weaker US dollar.
“Strong demand across many of our key markets drove continued sales growth in the second quarter, particularly in North America, and resulted in solid profitability,” said Tom Linebarger, chief executive of Cummins. “The strength of the order board reflects robust underlying demand in many of our markets which is remarkable considering the challenges and uncertainty we faced during this same period last year."
However, he added that the off-road engines sector continues to experience "significant supply chain constraints”.
Earnings before interest, taxes, depreciation and amortisation (EBITDA) in Q2 were $974 million (15.9 per cent of sales), compared to $549 million (14.3 per cent of sales) a year ago.
Net income attributable to Cummins in Q2 was $600 million ($4.10 per diluted share) compared to US$276m ($1.86 per diluted share) in 2020. The tax rate in the second quarter was 21.4 per cent, including $7 million, or $0.05 per share, of unfavourable discrete items.
Cummins also announced that it is looking expand its filtration business and make more profitable, possibly by separating the business into a stand-alone company, to explore new products and markets. Cummins Filtration has a broad portfolio of products for use in on-highway, heavy, medium and light-duty trucks, off -highway industrial equipment and power generation systems.
“Cummins Filtration is a technology leader with global presence and significant runway for continued growth,” said Linebarger. “We expect that the strategic alternatives we are considering will result in enhanced value for our stakeholders and position Cummins Filtration to take advantage of enhanced opportunities to invest in organic and inorganic growth.”
Cummins has maintained its full-year 2021 revenue guidance of a 20-24 per cent increase over last year. EBITDA is expected to be in the range of 15.5-16 per cent and the company expects to return 75 per cent of operating cash flow to shareholders in 2021 in the form of dividends and share repurchases.