Cummins Engine Reports Earnings of 75 Cents Per Share for the Q4
28 January 1999
Cummins Engine Reports Earnings of 75 Cents Per Share for the Fourth Quarter
COLUMBUS, Ind.--Jan. 28, 1999--
CUMMINS ENGINE COMPANY, INC.
(Millions, except per share amounts)
FOR THE FOURTH QUARTER ENDED December 31, 1998 December 31, 1997
---------------------------- ----------------- -----------------
Net Sales $1,606 $1,559
Earnings before income taxes $ 42 $ 87
Net earnings 29 64
Basic earnings per share $ .75 $ 1.69
Diluted earnings per share .75 1.66
Weighted-average number of shares
for EPS:
Basic 38.4 38.2
Diluted 38.4 38.8
FOR THE YEAR ENDED December 31, 1998 December 31, 1997
------------------- ----------------- -----------------
Net Sales $6,266 $5,625
Before special charges
----------------------
Earnings before income taxes $ 211 -
Net earnings 140 -
Basic earnings per share $ 3.64 -
Diluted earnings per share 3.62 -
Weighted-average number of shares
for EPS:
Basic 38.5 -
Diluted 38.7 -
As reported
-----------
Earnings (loss) before income
taxes $ (6) $ 286
Net earnings (loss) (21) 212
Basic earnings (loss) per share $ (.55) $ 5.55
Diluted earnings (loss) per share (.55) 5.48
Weighted-average number of shares
for EPS:
Basic 38.5 38.2
Diluted 38.5 38.7
Cummins Engine Co. Inc. today reported net earnings of $29 million, or 75 cents per share, on fourth-quarter sales of $1.61 billion, compared to the fourth quarter of 1997, when the company reported net earnings of $64 million, or $1.66 per share, on sales of $1.56 billion.
"Sales for the quarter were higher due to the acquisition of Nelson Industries earlier in the year," said Chairman and Chief Executive Officer Jim Henderson. Excluding Nelson, sales for the quarter were down slightly. "Our revenues reflect continued strength in the North American heavy-duty truck market as well as record shipments for the Dodge Ram pickup truck engine. These increases were tempered, however, by reduced demand in both agricultural and power generation markets, and continued weakness in Asia."
"Our aggressive investment in new products continues to affect earnings at the gross margin line due to higher product introduction costs, which will decrease as we ramp up production," said Henderson. "We have made significant progress in 1998 toward reducing our selling, administrative, and research and engineering costs. The restructuring actions we announced in the third quarter are on schedule, and we have already reduced our salaried and administrative workforce by nearly 800 people worldwide. We continue to work to reduce these costs even further."
"Looking ahead to 1999, we see continued strength in the North American heavy-duty truck and construction markets, at least early in the year," said Henderson. "That will be offset in markets where equipment demand is driven by commodity prices, continued weakness in Asia and growing economic uncertainty in Latin America. In this environment, revenues will likely remain flat. We enter the new year confident that we have taken steps to improve margins during 1999."
Sales of $392 million to the worldwide heavy-duty truck market were flat compared to the fourth quarter of 1997, reflecting strong sales in North America, offset by weakness in the U.K., Mexico and Latin America. Cummins said that production of its new Signature 600 engine, with the first fully integrated electronic controls and dual overhead cam design in automotive history, is on schedule and continues to receive praise from truck owner-operators, its target customer.
Sales to the medium-duty truck market of $135 million were 9 percent lower from the year-ago quarter reflecting a shift in mix between engine families.
Sales of $229 million to the bus and light commercial vehicle market were 9 percent higher than fourth-quarter 1997 levels. This reflects the success of the ISB engine, introduced in January 1998, and strong sales in the North American bus market.
Power generation sales of $330 million were 3 percent lower than the year-ago quarter primarily due to reduced demand overseas. Industrial sales of $246 million were down 12 percent compared to the fourth quarter of 1997 as a result of lower sales in agricultural markets worldwide. Earlier this month, Cummins introduced three new engines for industrial markets, including a 3.3-liter engine to be produced under an agreement between Cummins and Komatsu Ltd. of Japan, targeted for use in smaller industrial applications.
Sales of filtration and other products of $274 million, 45 percent higher than the fourth quarter of 1997, are favorably affected by the acquisition of Nelson Industries in early 1998. Cummins said that the acquisition of Nelson had a positive impact on earnings for the year, and that the expected synergies between Fleetguard and Nelson were continuing to grow.
Excluding special charges taken in 1998, net earnings were $140 million, or $3.62 per share, on sales of $6.3 billion, compared with 1997 net earnings of $212 million, or $5.48 per share, on sales of $5.6 billion. For 1998, including special charges for restructuring, adding to product coverage reserves, and a settlement with the Environmental Protection Agency, Cummins reported a net loss of $21 million, or 55 cents per share.
Cummins, headquartered in Columbus, Ind., is the world's largest producer of diesel engines above 200 horsepower. The company provides products for customers in its key markets: engines, including automotive and industrial, power generation, and filtration. Press releases by fax may be requested by calling News on Demand (toll free) at 888-329-2305. Cummins' home page on the Internet can be found at http://www.cummins.com.
Certain information included in this press release is forward-looking and involves risks and uncertainties, including general economic and competitive conditions that could significantly affect expected results.