US: Cummins expects significant growth in 2007

Wednesday, May 09, 2007,

Tags: Financial Results, Supplier Strategy.

AutomotiveWorld.com

Cummins chairman and chief executive officer Tim Solso recently told shareholders that the company is poised for significant growth in fiscal 2007 and beyond.

According to Cummins, 2006 was its most profitable year. The company reported net earnings of US$715m on sales revenues of about US$11.4bn. Solso pointed out that since 2003 Cummins has outperformed its peer group in terms of revenue growth, net income growth, shareholder returns and conversion of earnings to cash.

"Our challenge is to remain focused on our growth strategy so that we can take full advantage of the opportunities ahead of us," Solso said, speaking at the recent annual meeting.

Solso spoke of the company's efforts to build on its five strategic principles - increasing the synergies among its complementary lines of business; being a low-cost producer; creating shareholder value; ensuring profitable growth and creating the right environment for employees - emphasising the significant number of growth opportunities available to Cummins over the next few years. Cummins stated that the growth into new engine markets comes even as the company's share is increasing in several of its engine markets, including heavy- and medium-duty truck, construction and oil and gas.

The company expects additional growth in its power generation business through the introduction of portable generator and auxiliary power units. The business segment is also investing to expand capacity at its alternator facilities.

The components business segment is expecting strong growth in revenue and should reach its profit target range in the fourth quarter of 2007, on the strength of increased demand for emissions-related products and technologies.

Cummins noted that its sales growth this year will be dampened as a result of the expected slowdown in the North American truck market due to 2007 EPA emissions changes, but earnings are forecast to remain strong. Sales are expected to grow 5%-7% and earnings are forecast to come in at US$6–US$6.50 a share.

Cummins expects robust growth in most of its products and geographic markets this year outside of the North American truck market and a return to higher profitability beginning again in 2008.

Cummins said its shareholders had re-elected all nine of its directors for another year and ratified the selection of PriceWaterhouse Coopers as the external auditing firm. Shareholders also approved a minor change in the company's stock incentive plan and voted to increase the number of authorised shares of common stock following Cummins' two-for-one stock split on 9 April.

Cummins also declared a quarterly common stock cash dividend of US$0.18 per share, payable on 1 June 2007 to shareholders of record on 18 May 2007.

Published on Wednesday, May 09, 2007