Cummins Inc. this week reported that the fourth quarter of 2009 was the most profitable fourth quarter in company history, eclipsing the previous mark set in 2007.
Sales of $3.4 billion grew 3 percent from $3.29 billion in the fourth quarter of 2008, while net income attributable to Cummins increased to $270 million, or $1.36 a share, from $43 million, or 22 cents a share, a year ago.
For all of 2009, the company reported revenues of $10.8 billion, down 25 percent from $14.3 billion in 2008. Despite the economic downturn, Cummins reported solid profits and significant positive cash flow in 2009 as the company's results improved on a quarter-to-quarter basis throughout 2009.
The company reported an increase in cash of $244 million in the fourth quarter and approximately $500 million for all of 2009, driven by broad-based efforts to lower costs, align manufacturing capacity with demand and reduce inventory levels across all its businesses. The company had $930 million in cash at the end of 2009.
"Given the extraordinarily challenging economic climate throughout much of the year, we are extremely pleased with our financial results for both the fourth quarter and all of 2009," Cummins chairman and CEO Tim Solso said in a statement.
"By taking decisive action early in the recession to bring our costs in line with real demand for our products and through the hard work of all our people worldwide, we delivered as we promised in 2009," he added. "We earned a solid profit during the deepest recession in decades and generated a significant amount of cash while continuing to invest in technologies and programs critical to our success."
Engine segment sales in the fourth quarter jumped 12 percent compared to the same period in 2008, while components sales, which are closely tied to engine volumes, grew 8 percent. When compared to the third quarter of 2009, the gains were even more dramatic: engine sales increased 51 percent and components sales were up 24 percent.
Despite the strong fourth quarter results, Cummins expects the first half of 2010 to be extremely challenging, especially in the United States and Europe.
"In many ways, the first half of 2010 will be more challenging than the environment we faced in the early part of the recession," Cummins president and COO Tom Linebarger said in a statement. "We will continue to manage our business very conservatively to ensure that we stay focused on our priorities of earning a solid profit throughout the entire downturn, investing in our future and demonstrating that we care about our customers more than anyone else in the industry."
Based on its current forecasts, Cummins expects 2010 sales and earnings to be similar to its 2009 performance. The company also expects to continue to generate positive cash flow and intends to significantly increase its capital investment in 2010.