Cummins saw stiff drop in sales, profit in 2020, but exceeded market expectations

Cummins Inc. saw revenue drop 16% in 2020 amid the pandemic, but the Indiana-based engine maker says it expects a sizable sales rebound this year.

In its fourth-quarter and full-year 2020 financial report, released Thursday, Cummins said full-year revenue was $19.8 billion, compared with $23.6 billion in 2019. The revenue results were slightly better than the expectations of analysts, who predicted revenue of $19.2 billion.

The Columbus-based company said sales in North America declined 21% last year, but its sales in China reached record levels, up 25% from the previous year. North America is Cummins’ largest geographic market, representing 58% of total revenue. China is its second-largest market, representing 14% of total revenue.

Looking ahead, Cummins said it expects full-year revenue to increase in a range of 8% and 12% this year. The company’s sales outlook is slightly more conservative than that of analysts, who are projecting 13% sales growth this year.

“Current indicators point to improving demand in a number of key regions and markets in 2021,” Chairman and CEO Tom Linebarger said in a written statement. “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.”

The company’s full-year profit was $1.8 billion, or $12.01 per share, down from $2.3 billion, or $14.48 per share, in 2019. The result exceeded analysts’ expectations of $11.31 per share.

For the fourth quarter, Cummins reported revenue of $5.8 billion, up from $5.6 billion during the same period in 2019. Profit for the quarter was $501 million, or $3.36 per share, up from $300 million, or $1.97 per share, a year earlier.

Cummins released its financial report before the stock market opened Thursday. Shares of the company were trading at $232 each at mid-morning, down 1.5% from Wednesday’s closing price.