COLUMBUS, Ind. — Cummins CEO Tim Solso said the Columbus, Ind.-based manufacturer expects the last three quarters of the year to show “progressively improved profitability” despite difficult market conditions and a slow economy.
The company estimates its 2001 operating earnings to 20 to 35 cents a share, including growth in its power generation and engine businesses. The $1.4 billion power generation business has doubled in profitability over the last two years and Cummins expects that unit to grow between 10 percent and 15 percent annually in the foreseeable future, Solos said. The engine business, thanks in part to a new long-term deal with DaimlerChrysler agreed to in May worth more than $5 billion in revenue, is expected to generate an EBITDA averaging 5 percent of sales over the business cycle.
Solso said the company also stands to benefit from a rebound in many of its key markets in the next few years, as well as from its continued focus on cutting costs.
“Volumes have dropped from 20 to 60 percent in many of our U.S. end markets,” Solso said. “(But) we have aggressively reduced cost to align to these market conditions, and as a result we are well positioned to be a very early beneficiary in both earnings and cash flow generation of an improving U.S. economy.”
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