Cummins Reports Improving Sales and Earnings Despite Continued Widespread Economic Weakness
– Company Increases 2009 Sales and Profit Guidance; Expects Challenging Environment in Early 2010 –

COLUMBUS, Ind.--(BUSINESS WIRE)--Oct. 30, 2009-- Cummins Inc. (NYSE: CMI) today reported third quarter sales of $2.53 billion and net income of $95 million, or $0.48 a share, down considerably from last year’s record third quarter results. However, the Company significantly improved its profitability and cash position from the second quarter despite the global recession that continues to affect demand in most markets.

Sales fell 31 percent and net income attributable to Cummins Inc. fell 59 percent compared to the same period last year. Third quarter Earnings Before Interest and Taxes (EBIT) of $155 million, or 6.1 percent of sales, decreased 59 percent from a year ago.

The third quarter results include $22 million of restructuring and other charges associated with the cost of job-reduction actions. Excluding the charges, EBIT was $177 million, or 7.0 percent of sales, and net income attributable to Cummins Inc. was $110 million, or $0.56 a share.

Compared to the second quarter, sales increased 4 percent on the strength of improving demand in China, India and Brazil and a short-term increase in on-highway engine and components sales in the United States. Those increases more than offset quarter-to-quarter sales declines in the Company’s Power Generation and Distribution businesses.

Despite the modest increase in sales, net income attributable to Cummins rose 70 percent, EBIT increased 42 percent and the Company improved its cash position by $152 million from the second quarter. The significantly improved profitability and cash position from the second quarter are largely the result of lower spending, better utilization of manufacturing capacity and reduced inventory.

“Given the continued weakness in many of our markets, the Company performed extremely well in the third quarter,” said Cummins Chairman and Chief Executive Officer Tim Solso. “The decisive actions we have taken over the past several months have allowed us to remain profitable, generate cash and invest in the Company’s future in the face of the worst recession in decades.”

Compared to the same period a year ago, sales fell by at least 25 percent in all four of the Company’s operating segments, with the largest declines coming in the Power Generation and Engine segments. Despite the continued weakness in demand, all four segments were profitable in the third quarter.

The recent economic improvement in China, India and Brazil benefitted Cummins during the quarter, due to the Company’s longstanding strong position in all three countries. In addition, the Company saw an increase in engine and components sales to the medium- and heavy-duty truck engines markets in the U.S. compared to the second quarter in advance of new emissions standards that take effect in January 2010. However, based on current orders and market intelligence, Cummins expects very low demand in these markets during the first half of 2010.

“While we saw improvement in some markets in the third quarter, we expect the economic climate to remain challenging until late 2010 – especially in the United States and Europe,” Solso said. “As we look ahead to the recovery, however, Cummins continues to be extremely well positioned to take advantage of a number of opportunities and market trends that offer the potential for significant long-term growth.”




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