Fourth quarter revenues of $4.5 billion decreased reflecting lower commercial truck production in North America. Revenues in North America decreased 13 percent while international sales improved by six-percent. Net income in the fourth quarter was $378 million compared to $161 million in 2015.
Cummins reported earnings before interest and taxes (EBIT) in the fourth quarter was $526 million, or 11.7 percent of sales, compared to $230 million, or 4.8 percent, of sales a year ago.
“Despite weak conditions in a number of our largest markets, Cummins delivered fourth quarter results that were a little better than expected due to our strong market share in on-highway markets in North America and the benefits of our cost reduction work,” says Tom Linebarger, chairman and CEO.
“We made significant progress in a number of our key initiatives in 2016, including executing our restructuring actions, completing the acquisition of our distributors in North America and continuing to invest in new products, all of which help position the Company for profitable growth when markets improve. We also returned 75 percent of the company’s operating cash flow to shareholders, consistent with our plan for the year.”
Revenues for the full year 2016 were $17.5 billion, eight-percent lower than 2015. Revenues in North America decreased 12 percent and international sales decreased two-percent, mainly due to foreign currency movements. Net income for the full year was $1.39 billion, compared to $1.4 billion in 2015. The full year tax rate was 24.6 percent in 2016.
Cummins expects full year 2017 revenues to be flat to down five-percent, and EBIT to be in the range of 11 to 11.5 percent of sales, the company says. Results in the first quarter of the year will continue to be challenged by difficult markets and are expected to mark the low point of the year. The company expects to return at least 50 percent of operating cash flow to shareholders in 2017 in the form of dividends and share repurchases.
