COLUMBUS, Ind. — Cummins Inc. has reported a 10 percent decrease in earnings for the second quarter of 2016 from the same period last year. Total revenue was $4.5 billion compared to $5 billion in 2015. Net income dropped from $471 million in 2015, to $406 million during the same quarter in 2016.
Company officials cite weak global demand for truck and power generation equipment leading to lower production. A strong U.S. dollar also drove revenues down by 1 percent.
The report has officials projecting 2016 revenues to fall 8 to 10 percent, higher than a previous projection of a 5 to 9 percent decline for the year.
Engine segment sales were down 14 percent to $2 billion. Revenues in the Distribution segment were up 3 percent to $1.5 billion. The Component segment dropped 8 percent to $1.3 billion. The Power Systems segment made the largest drop of 16 percent to $921 million.
“We made strong progress in our cost reduction initiatives in the second quarter, while continuing to invest in and launch new products that will drive profitable growth in the future,” said Tom Linebarger, Cummins Chairman and CEO. “Benefits from restructuring actions, material cost reduction initiatives, and improvements in product quality helped to mitigate the impact of weak demand in a number of our largest markets and will position the Company for stronger performance when markets improve. We have returned more than $1 billion to shareholders so far this year, through a combination of dividends and share repurchases. Our Board of Directors recently approved an increase in our quarterly dividend of 5.1 percent, consistent with our plans to return 75 percent of operating cash flow to shareholders in 2016,” concluded Linebarger.
