Meritor, Heavy-Duty Truck Engine Sales Boost Cummins Profits

Profits at Cummins Inc. rose to $720 million in the second quarter of 2023, or diluted earnings per share of $5.05, from $702 million, or $4.94, in the year-ago period on the back of a jump in sales, including at newly acquired Meritor and in the North American heavy-duty truck engine market, the company said Aug. 3.

Cummins’ second-quarter revenue totaled $8.64 billion, an increase of 31% from $6.59 billion in the same quarter in 2022. The revenue total beat analyst expectations, according to Zacks Equity Research. Consensus analyst expectations were for revenue of $8.25 billion.

Columbus, Ind.-based Cummins said sales in North America increased 31% year-over-year and international revenues increased 32% due to the addition of axles and brakes specialist Meritor, and strong demand across most global markets. The company did not provide specific figures.

“Strong demand across most of our key markets and regions resulted in record revenues and solid profitability for the company in the second quarter of 2023,” CEO Jennifer Rumsey said.

Cummins’ Components unit posted the highest second-quarter sales by segment at $3.425 billion, after a jump of 76% from $1.95 billion in the year-ago period.

The segment’s revenues in North America increased by 70% and international sales increased by 84% due to the addition of Meritor and higher global demand.

Axles and brakes contributed $1.249 billion to the components unit’s sales in the most recent quarter, as opposed to zero in the year-earlier period.

Usually Cummins’ largest segment, the Engine unit reported sales of $2.988 billion in the most recent quarter, up 8% from $2.775 billion a year earlier, the company said.

Cummins’ on-highway engine revenues increased 7% year-over-year to $2.504 billion from $2.332 billion on the back of strong demand in the North American truck market and price increases.

The segment’s sales in North America rose 7% year-on-year and 10% elsewhere in the world, the company said, without providing more detail.

Heavy-duty truck engine sales at Cummins in the most recent quarter totaled $1.117 billion, up 12% compared with $1.001 billion in the same period a year earlier.

Cummins shipped 36,400 heavy-duty truck engines in the three months that ended June 30, compared with 30,900 in the year-ago period. Through the first half of 2023, the company shipped 71,100 heavy-duty truck engines, compared with 59,500 in the year-earlier period.

Sales at Cummins’ rebranded alternative fuel systems unit Accelera rose 102% year-over-year to $85 million from $42 million in the second quarter of 2022.

But Accelera posted an operating loss of $114 million in the most recent quarter, compared with a loss of $79 million in the year-ago period.

Cummins said costs associated with the development of electric powertrains, fuel cells and electrolyzers, as well as products to support battery-electric vehicles were behind the operating loss.

The company launched the Accelera brand in March to replace its New Power business unit, which itself was launched in 2019. The brand is set to play a major role in Cummins’ decarbonization strategy.