Cummins Improves 2021 Financial Expectations
Cummins Inc. is projecting a much better 2021 than initially expected.
On Tuesday, company officials announced its first quarter revenues of $6.1 billion increased 22% from the same quarter in 2020. Sales in North America increased 7% while international revenues increased 45% driven by strong demand across all global markets as well as new product sales in China and India.
The earnings statement shows how sharply the company’s business has changed as the COVID-19 pandemic dissipates, though Tom Linebarger, Cummins CEO, said the company will continue to employ COVID-19 safety protocols in its facilities.
“We continue to take necessary precautions at all of our facilities to mitigate the spread of COVID-19 and our focus remains on the health and safety of our employees,” Linebarger said. “We are optimistic that continued vaccination distribution globally will reduce the impact of the virus in the second half of the year, but there is still a risk of an increase in cases somewhere in the world that could result in lower customer demand, additional facility shutdowns or additional supply chain constraints in the future. Having managed through an extremely challenging 2020 and a dramatic ramp up in the first quarter of 2021, Cummins is in a strong position. We have secured some important new business wins in our Engine and Components businesses. And at the same time, we continue to invest in future growth bringing new technologies to customers and generating strong return for shareholders.”
In North America, revenues grew 7% to $3.3 billion as the truck industry has started building more heavy- and light-duty pickup trucks. Industry production of heavy-duty trucks in the first quarter was 60,000 units, an increase of 15% from 2020 levels, while our heavy-duty unit sales were 23,000, an increase of 25% from 2020. Industry production of medium-duty trucks was 32,000 units in the first quarter of 2021, an increase of 2% from 2020, while our unit sales were 27,000 units, an increase of 5% from 2020.
Cummins also shipped 42,000 engines for use in RAM pickups, an increase of 49% from the first quarter in 2020.
The story was much the same in China, where first quarter revenues were $2.1 billion, an increase of 95% driven by higher sales in highway and construction vehicles. Medium- and heavy-duty truck demand in China was 587,000, an increase of 95% driven by an increase in orders to meet new air quality standards in China. Linebarger also reported large revenue increases from Brazil and India.
“We have raised our forecast for total company revenues for 2021 to be up 20% to 24% compared to our prior guidance of up 10% at the midpoint,” Linebarger said. “This guidance reflects a stronger outlook in most markets and regions. We have raised our forecast for industry production of heavy-duty trucks in North America to 264,000 units, up 45% compared to 2020 and above our prior guidance of 255,000 units. Despite the supply chain constraints our industry is experiencing, demand has continued to outpace our expectations from the beginning of the year. In the medium-duty truck market, we are increasing our forecast for industry production to 140,000 units, up 35% year-over-year and above our prior guidance of 125,000 units. We expect our engine shipments for pickup trucks in North America to be up 15% compared to 2020, an increase of 10% from our expectations three months ago.”
Other first quarter notes include:
¯ A global strategic partnership with Daimler to provide medium duty powertrain systems for Daimler Trucks and Buses;
¯ Tony Satterthwaite, Cummins vice chairman, testified before Congress in the Hearing on Transportation Technologies, reinforcing Cummins’ commitment to achieve a net zero carbon emissions future through continued innovation in advanced internal combustion, battery, and fuel cell technologies. Satterthwaite urged the government to make the infrastructure investments required to support the successful market adoption of zero carbon emission technologies.
¯ Employees, contingent workers and their spouses and dependents (ages 16+) could receive the Pfizer-BioNTech COVID-19 vaccine at several locations across the United States. Cummins continues to collaborate with health officials around the world to provide employees with access to COVID-19 vaccines.