Major off-highway diesel engine maker Cummins expects good growth in key regional market sales in 2021 after reporting resilient trading in COVID-19-hit 2020.
Based on the current forecast, the U.S.-headquartered giant projects full-year 2021 revenues to be up 8%-12%, and EBITDA (earnings before interest, taxes, depreciation, and amortisation) to be in the range of 15%-15.5% of sales. Cummins expects revenues to increase in all regions and major markets except China where we expect demand to moderate after a record year in 2020.
Cummins chairman and CEO Tom Linebarger said: “Current indicators point to improving demand in a number of key regions and markets in 2021. However, significant uncertainty remains, requiring continued strong focus on managing costs and cash flow as our markets continue to recover around the world. We are still operating under a pandemic with extreme safety measures in place, and our suppliers and customers are doing the same. This is presenting challenges to global supply chains as our industry responds to rising demand across multiple end markets. Having effectively managed through an extremely challenging 2020, Cummins is in a strong position to keep investing in future growth while continuing to return cash to shareholders.”
Fourth-quarter 2020 Cummins revenues of US$5.8 billion increased 5% from the same quarter in 2019. Sales in North America were flat while international revenues increased 12%, driven by strong demand in China truck and construction markets and the growth in new product sales in India.EBITDA in the fourth quarter were $837 million (14.4% of sales), compared to $682 million (12.2% of sales) excluding restructuring a year ago. Fourth-quarter EBITDA included $36 million of expenses associated with reorganisation activities and facility closures primarily driven by transformation initiatives in Cummins’ Distribution segment.
Net income attributable to Cummins in the fourth quarter was $501 million ($3.36 per diluted share) compared to $390 million ($2.56 per diluted share), excluding 2019 restructuring. The tax rate in the fourth quarter was 19.7%.
Revenues for the full year were $19.8 billion, 16% lower than 2019. Sales in North America declined by 21%, and international revenues declined by 7%. Sales fell in all major regions except China, where demand for trucks and construction equipment reached record levels.
“We faced many challenges in 2020, driven by the severe global impact of the COVID-19 pandemic.” Said Linebarger. “I want to thank all of our employees for their dedication to our company and our customers as they adjusted to the unprecedented slowdown in the global economy and then responded as demand accelerated sharply in the second half of the year, all while facing significant disruption to their daily routines at work and home.”
EBITDA for the year was $3.1 billion (15.7% of sales) compared to $3.7 billion (15.8% of sales) excluding restructuring in 2019. Net income attributable to Cummins for the full year was $1.8 billion ($12.01 per diluted share), compared to net income of $2.4 billion ($15.05 per diluted share) excluding restructuring in 2019. The tax rate for 2020 was 22.5%.
