Cummins on Thursday reported revenue of $5.8 billion for the fourth quarter of 2020, a 5 percent increase from the same quarter in 2019.
The company says sales in North America were flat while international revenues increased 12 percent driven by strong demand in China truck and construction markets as well as the growth in new product sales in India.
Cummins' earnings before interest, taxes, depreciation and amortization (EBITDA) in the fourth quarter were $837 million (14.4 percent of sales), compared to $682 million (12.2 percent of sales) excluding restructuring a year ago. Fourth quarter EBITDA included $36 million of expenses associated with reorganization activities and facility closures primarily driven by transformation initiatives in our Distribution segment.
The company adds revenues for the full year 2020 were $19.8 billion, 16 percent lower than 2019. Sales in North America declined 21 percent and international revenues declined 7 percent. Cummins says sales actually declined 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,” says Tom Linebarger, chairman and CEO. “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.”
Cummins says final EBITDA for the year was $3.1 billion (15.7 percent of sales) compared to $3.7 billion (15.8 percent of sales) excluding restructuring in 2019.
In its engine business, Cummins says its fourth quarter sales were $2.3 billion, up 2 percent. On-highway revenues increased 1 percent and off-highway revenues increased 4 percent. Sales also were flat in North America but increased 8 percent in international markets primarily due to increased demand in China and India, the company says.
Business was down by 2 percent over the same period in the company's distribution business, slipping to $2 billion in the fourth quarter. The company says revenues in North America were down 7 percent and international sales increased by 8 percent. Increased demand in power generation markets offset by declines in parts and service.
Looking ahead, based on the current forecasting, Cummins projects full year 2021 revenues to be up 8 to 12 percent, and EBITDA to be in the range of 15.0 and 15.5 percent of sales. The company says it expect revenues to increase in all regions and major markets except China where it expects demand to moderate after a record year in 2020.
“Current indicators point to improving demand in a number of key regions and markets in 2021," says Linebarger. "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,” Linebarger adds.