Cummins Inc. (CMI: 70.66 0.00 0.00%) plans to invest $100 million to expand its diesel engine manufacturing plant and technical center in Seymour, located in southern Indiana. The expansion would add 200 engineering and manufacturing employees to its existing base of 450 people over the next five years.The Seymour plant currently manufactures high-horsepower diesel engines for power generation, mining and other industrial applications. The expansion would cater to the company meeting the high demand for these products in Brazil, China and India.
The expansion would enable the plant to produce a new and larger-displacement engine apart from its existing high-horsepower lineup. It would also enhance the plant’s capacity and manufacturing capability, including a new assembly line, paint area and production test cells. The company has changed the name of the facility to Seymour Engine Plant from Cummins Industrial Center.
The expansion of the technical center would boost its product-testing capability through the addition of equipment, test cells and other facility upgrades. This is expected to start soon and will be completed by mid-2011.
To consolidate its position in the engine division, Cummins continues to invest heavily in capacity expansion and the introduction of new products. The company has plans for 22 major facility additions or upgrades in the near future and is expanding its global distribution network. Its new product launches include light-duty engines in the U.S. and China by 2010 and engines that meet the next wave of on- and off-highway emission standards in the U.S. and Europe over the next few years.
Operating income in the quarter improved substantially to $246 million from $29 million a year ago. Earnings before interest and taxes (EBIT) increased to $266 million or 10.7% of sales from $94 million or 4% of sales a year ago, excluding restructuring charges.
Sales in the quarter increased marginally by 2% to $2.48 billion as growth in the company’s Components and Distribution segments slightly more than offset declines in the Engine and Power Generation segments.
The results were driven favorably by continued strength in China, India and Brazil, partially offset by weak demand in North America with medium-duty truck, bus and heavy-duty engine shipments decreasing 80% on a year-over-year basis.
Cummins has projected sales of $12 billion for 2010, up from the previous guidance of $11 billion for 2010. The company now anticipates EBIT margin of 10% of sales, up from the prior outlook of 7% of sales.
The company continues to expect a capital spending of $400 million in 2010, an increase of nearly 30% from 2009, to fund projects critical to its long-term growth.| Analysts' Targets | |
| Morgan Joseph & Co. Inc. | $90 |
| Buy | |
| Thursday, April 29, 2010 | |
| Sterne, Agee & Leach | $79 |
| Buy | |
| Wednesday, March 17, 2010 | |
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