By Lisa Beilfuss
Engine manufacturer Cummins Inc. said second-quarter profit rose
5.6% as demand in North American markets and the benefit of
acquisitions offset weakness in Brazil and other foreign
markets.
Shares, which have declined nearly 10% in the past three months,
rose 4% in premarket trading to $128.75 as both profit and revenue
topped analysts' expectations.
The Indiana company backed its outlook for the year, still
projecting 2% to 4% revenue growth. That translates to $19.61
billion to $19.99 billion, bracketing the $19.81 billion analysts
predict. The affirmed guidance comes despite weak economic
conditions in key foreign markets and a stronger U.S. dollar that
also is pressuring Cummins' revenue.
For the latest period, Cummins reported earnings of $471
million, or $2.62 a share, up from a year-earlier profit of $446
million, or $2.43 a share.
Revenue grew 3.7% to $5.02 billion. Adverse foreign exchange
shaved 4% off the top line, the company said.
Analysts projected $2.55 in per-share profit and $4.94 billion
in revenue.
In North America, sales rose 12%, partially offset by a 6% drop
in international revenue. Sales in Brazil fell the most, the
company said. Cummins, like others, is grappling with a weak
Brazilian economy dogged by slow growth and high inflation that is
hampering demand for its products.
Cummins's engine segment, its largest, reported a 2% increase in
sales as strong demand in North American truck and bus markets
countered weaker demand in global industrial markets and lower
truck demand in Brazil.
Distribution revenue rose 21%, thanks largely to distributor
acquisitions, while components sales increased 9%. In the company's
power-generation business, revenue edged 1% higher.
Write to Lisa Beilfuss at lisa.beilfuss@wsj.com
Subscribe to WSJ: http://online.wsj.com?mod=djnwires