The Indian arm of Cummins Inc. (CMI) has announced its plan to invest up to Rs.7.5 billion ($160 million) to expand capacity at its Phaltan site in Maharashtra, India. The company intends to set up at least six manufacturing facilities at the site over a span of two years.
The Phaltan site manufactures diesel and gas engines of various capacities to cater to the power, industrial and automotive markets in India, U.S. and Europe. The investment will enable the company to produce a range of products including high horsepower engines. It will also set up an engine-rebuilding centre and a facility to produce power generation equipment, mainly for exports, at the site.
In the second quarter of the year, Cummins witnessed more than a fourfold increase in profit to $246 million or $1.25 per share from $56 million or 28 cents per share in the same quarter a year ago. The company significantly outpaced the Zacks Consensus Estimate of 89 cents per share during the quarter.
The company’s results were backed by enhanced productivity and strong sales gains in its international markets. Sales in the non-U.S. markets, which accounted for 64% of the company’s revenue in the quarter, shot up 51% from the prior year. Cummins India ’s exports more than doubled to Rs.2.3 billion ($49 million) during the quarter.
Revenues in the quarter soared 32% to $3.21 billion, primarily driven by impressive sales gains in the company’s Engine and Components segments. It was higher than the Zacks Consensus Estimate of $2.85 billion.
Operating income more than tripled to $396 million from $121 million a year ago. Earnings before interest and taxes increased to $401 million or 12.5% of sales from $109 million or 4.5% of sales a year ago.
Based on the improved results and continued strength in China, India and Brazil, Cummins has a Zacks #1 Rank (Strong Buy) and we reiterate our long-term Outperform recommendation on the stock.
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