The Republic
During the early stages of the pandemic with most of the spread concentrated in China, one of the first American companies to feel the financial impact of COVID-19 was Cummins Inc.
Cummins has 10 facilities in Hubei province, including in its capital, Wuhan, which was the epicenter of the outbreak. The virus forced the company to stop production in China in late January 2020 before public health restrictions ultimately changed the way it did business around the world.
With the global shutdowns came the largest quarterly decline in revenue in the company’s 102-year history. In June, Cummins reported its second quarter revenue had declined 38% to $3.9 billion, down from $6.2 billion during the same quarter in 2019. Net income of $276 million was down from $675 million in the second quarter of 2019 for the company as the demand for engines in oil and gas markets declined 88%.
Many felt anxiety when the figures were released, but it didn’t take long for those anxieties to be calmed. While some companies shuttered doors in 2020, Cummins adapted and roadmapped its future.
The company has made significant changes over the past several weeks that suggest the future of the company is going in the right direction as pandemic restrictions loosen.
Cummins has outperformed Wall Street expectations in recent quarters after finding new sales opportunities with major truckmakers, including two of the biggest in Germany-based Daimler Trucks and Japan-based Isuzu Motors Limited.
Additional confidence in the company has been gained in Cummins’ blueprint for the future.
In November, Cummins made the announcement that it plans to shift away from fossil fuels and ramp up its fuel cell and hydrogen production business in an effort to fight greenhouse gas emissions. Cummins Vice Chairman Tony Satterthwaite even testified before the Senate Committee on Energy and Natural Resources in Congress last week about how the government can help in moving the country towards zero emissions.
Over the past year, the company’s stock has more than doubled. Cummins stock closed at $116.48 on March 20, 2020, opposed to $221.37 on Jan. 4, 2021. Last week, the company reached an all-time high stock price when it hit $276 after announcing a deal to supply engines for truckmaker Hino Trucks. Since, it has continued to hover between $250 and $270 per share.
Revenues are now mimicking the upward trajectory of the stock market for Cummins.
Last month, the company reported its first quarterly revenue increase since the second quarter of 2019, as $5.8 billion in revenue was recorded during the fourth quarter of 2020 — a 5% increase from the same quarter the year before.
It’s remarkable how well the company has navigated the pandemic, and it’s a good sign for the community that Columbus’ largest employer is continuing to grow.
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