As 2015 passed, Cummins entered a new 2016 year. Let's take a look back and review the performance of Cummins in 2015 today.
In 2015, sales revenue reached 19.1 billion U.S. dollars. If the relevant expenditures such as restructuring and impairment losses are not calculated, the EBIT margin is 12.5%.
In the fourth quarter of 2015, revenue was US$4.8 billion. If no reorganization, derogation and other related expenses were calculated, the EBIT margin was 11.1%.
The company expects sales revenue to decline by 5-9% in 2016, and EBIT is expected to be between 11.6% and 12.2%.
Recently, Cummins Inc. (NYSE: CMI) announced its full-year and fourth-quarter sales in 2015.
Cummins Announces 2015 Annual and Fourth Quarter Results and Reveals 2016 Expectations
Higher exchange rate of the US dollar led to a 4% drop in sales. Cummins’ sales revenue in the fourth quarter was US$4.8 billion, down 6% year-on-year.
Sales revenue in North America fell by 2%, while sales in the international market experienced a greater decline, with a 12% drop. In many international markets, sales in Latin America have fallen the most.
In the fourth quarter, EBIT was US$531 million (unreported US$211 million impairment and US$90 million restructuring expenses), and the EBIT margin was 11.1%, compared with EBIT before the same period of 2014 of US$661 million. EBIT margin was 13%.
In order to more scientifically plan Cummins' global manufacturing layout, the company has reduced the size of North American light engine manufacturing. This move requires a reassessment of the book value of the relevant manufacturing assets. As a result, Cummins financial data recorded a non-cash, pre-tax derogation of $221 million for the quarter. In addition, Cummins also generated a restructuring charge of $90 million, and confiscated $60 million in financial accounting in the fourth quarter.
Cummins’ net income for the fourth quarter of 2015 was $161 million ($0.92 per diluted share), and net income was $355 million ($2.02 diluted per share) if no impairment and restructuring expenses were calculated. Excluding one-off items, the data for the same period in 2014 was $465 million ($2.56 per diluted share).
In 2015, sales revenue was US$19.1 billion, a year-on-year decrease of 1%. Although revenues in the North American market increased by 7%, international markets fell by 11% due to declining sales in Latin America, Europe, and Asia Pacific.
The pre-tax profit for the whole year was 2.09 billion U.S. dollars and the EBIT margin was 10.9%. Excluding balance loss and restructuring expenses, EBITDA was US$2.39 billion, and EBIT margin was 12.5%. Excluding one-time items, Cummins’ EBIT in 2014 was US$2.53 billion.
Cummins’ net income for the full year 2015 was US$1.4 billion (dilution of US$7.84 per share). If the impairment and restructuring expenses were not calculated, the gain was US$1.59 billion (dilution of US$8.93 per share), and Cummins’ pre-tax income for the same period last year was 1.67 billion. USD (dilution of $9.13 per share).
“We made significant progress in a series of key initiatives in 2015, including launching new products in the Chinese market and gaining market share, successfully acquiring and integrating North American distribution agencies, improving product quality while effectively reducing material costs.†Cummins Inc. TomLinebarger, chairman and chief executive officer, said, “But the weak market and strong appreciation of the US dollar have brought tremendous challenges to our business. In order to cope with the sluggish market demand, we have promoted reorganization and other aspects of the staff placement program. And start related initiatives in manufacturing operations to reduce costs."
“Although the macroeconomic environment still faces many challenges, benefiting from business restructuring, reducing material cost initiatives and product quality improvement, coupled with the upcoming new product and upgrade product platform in 2016, Cummins will have a stronger business performance in the future. We expect it to be in 2016. The company will return 75% of its operating cash flow to shareholders in the form of dividends and share repurchases, which are based on our 2015 related initiatives. In 2015, our return on shareholders reached $1.5 billion, creating a new record. "Lan Bowen made the above summary.
Based on the current forecast, in 2016, Cummins' sales revenue will drop between 5% and 9%. EBITDA is about 11.6%-12.2%.
Highlights of 2015
Cummins Corporation's dividend increased by 25%, repurchasing 7.2 million shares
Cummins has been named the most ethical company by the Ethisphere Institute for eight consecutive years
Cummins has been ranked among the top 50 diversified companies by Diversity Inc for seven consecutive years
Cummins Receives Golden Peacock Award for Outstanding Achievement in Corporate Governance
Cummins Ranks Dow Jones North American Sustainability Index for 10 Consecutive Years
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