Our viewpoint: Cummins’ impressive run of record earnings continues


Aim Media Indiana

Cummins’ continued success as the global powerhouse’s business evolves is quite a story — one that is closely watched on Wall Street as well as on Main Streets throughout our region and across Indiana.

And last week, the Columbus-based company once again reported record quarterly earnings that outperformed the expectations of analysts who forecast what the market should expect when those earnings are announced.

Cummins reported $8.6 billion in revenue during the April-June period, up 31% compared to the second quarter last year. Wall Street had expected earnings of about $8.36 billion.

“Strong demand across most of our key markets and regions resulted in record revenues and solid profitability for the company in the second quarter of 2023,” Cummins Chair and CEO Jennifer Rumsey said in a story reported by The Republic’s Andy East.

In this editorial space, we have been effusive in our praise of Rumsey since she became Cummins’ first woman CEO last year and also took the reins as the company’s board chair this summer. Her rise through the ranks is a terrific story for Cummins and for Columbus.

It’s evident from the results that Cummins has in Rumsey a homegrown leader who knows the business inside out because she devoted her career to it. The continuing run of record quarterly profits on her watch that consistently beat Wall Street forecasts would be remarkable for any Fortune 500 company leader.

That said, Cummins’ fortunes ultimately lie with the innovations of its engineers, the productivity and dedication to quality of its workforce, focused attention to its customers’ needs and talented leadership across the company. And on these measures, those who work for Cummins get credit for second-quarter business segment results like these, as East reported:

Components: Sales of $3.4 billion were up 76% from the same period a year ago.

Engine: Sales of $3 billion represented an increase of 8%.

Distribution: Sales of $2.6 billion were up 15%.

Power Systems: Sales of $1.5 billion were up 21%.

Accelera: Sales of $85 million represented a 102% increase.

Business is cyclical, and for what feels like years now, we’ve been hearing some economists and experts warning a recession is on the horizon. So far, that hasn’t borne out, but the analysts East talked to in his reporting noted the company is signaling earnings that might not be as robust for the rest of this year.

The company forecasts full-year earnings will increase up 15% to 20% this year, which given earnings to date would suggest a cooldown from the hot earnings of the first couple of quarters. At the same time, though, analysts see a company that also is routinely outperforming the quarterly earnings guidance.

Roger Lee, director of research at Columbus-based Kirr, Marbach and Co., said, “2023 is still shaping up to be an ‘exceptional year’ for Cummins, but the market is trying to figure out what 2024 may have in store. … Even if things are slowing down, it just means that we don’t think 2024 is going to grow more than 2023, but 2023 is still an exceptional year.”

That’s a good news story for Cummins, for our region and for Indiana.

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