Truck Demand Boosts Cummins’ Sales
What a difference a year makes.
Last year, at the height of the COVID-19 pandemic, Cummins Inc. found itself looking at a 38% decrease in second quarter revenue as the pandemic caused Cummins’ customers to shut down and brought economic activity to a screeching halt.
On Tuesday, Tom Linebarger, Cummins chairman and CEO, painted a much different picture of the company’s finances. Cummins, which owns and operates the Jamestown Engine Plant in Busti which employs XXXX, reported second quarter revenvues of $6.1 billion, a 59% increase from the same quarter in 2020. Sales in North America increased 74% while international revenues increased 42 percent driven by strong demand across all global markets compared to the same quarter in 2020, which was impacted significantly by the pandemic.
Some of the news Linebarger shared Tuesday is particularly good for the Jamestown Engine Plant.
“Demand remained strong in the second quarter as the global economy continued to improve,” Linebarger said Tuesday. “Driving strong sales growth across most businesses and regions and resulting in solid profitability. We are encouraged by economic trends across a number of our key end markets which point to strong demand for the remainder of this year and extending into 2022. In North America freight activity continues to grow, leading to elevated spot and contract rates and driving fleet profitability and a rising backlog of truck orders. Leading indicators for non-residential construction continue to improve and fiscal support for investment in capital projects is robust, led by North America and Europe.”
Based on the current forecast, Cummins officials continue to project 2021 revenues to increase between 20% and 24% from 2020 levels.
Engine segment sales increased 75% in the second quarter of 2021 to $2.5 billion, with on-highway revenues increasing 104% driven by strong demand in the North American truck and pickup markets. Off-highway revenues increased 10% driven by strong demand in international construction markets. Sales increased 104% in North America and 26% in international markets.
Demand currently exceeds supply in a number of important markets pointing to strong demand for our products into 2022,” said Mark Smith, Cummins CFO. “Iwant to thank our global employees for their ongoing commitment to meet the needs of our customers while delivering solid financial performance. We continue to extend our leadership position through advancing the technologies, the power the profitability of our customers today. And we’ll continue to do so for some time to come. This sets the company up to further increase the earnings power of our core business, while we continue to invest in a range of new technologies and develop new partnerships that position company for additional growth.”
NOT ALL GOOD NEWS
Global markets in which Cummins is active are still recovering, but the company is seeing higher costs and inefficiencies as it deals with supply chain issues that are likely to restrain growth throughout the year. Jennifer Rumsey, Cummins SDLKAJSD, said the availability of microprocessors continue to be Cummins biggest constraint, with a projected improvement in microprocessors from Malaysia delayed a bit from the projected June target. Rumsey said the microprocessor issue is likely to ease in the second half of the year.
“And while we have been encouraged by the ongoing recovery across all of our global markets, our industry continues to experience significant constraints across the supply chain, leading to an extended period of inefficiencies and higher cost, despite the supply chain impacts, though we are continuing to deliver strong financial performance, while supporting our customers,” Linebarger told investor analysts. “The ability to supply our customers remains our key focus now. And while we are optimistic that the supply chain constraints will ease with time, they are likely to persist through the end of the year.”