Cummins in strongest position ever as a company: CEO

COLUMBUS, Ind. — Despite what’s supposed to be a downturn year for diesel truck sales, engine maker Cummins says it’s poised to build off its record 2006 with an even stronger performance again in 2007 and beyond, chairman and CEO Tim Solso told shareholders this week at the company’s annual meeting.

Cummins enjoyed its most profitable year ever last year when, on the back over overseas sales, it reported net earnings of $715 million on $11.4 billion in sales. Solso noted that the company’s profit as a percentage of sales for the three-year period between 2004 and 2006 was the best in 40 years.

Cummins in weathering the North American downturn
by robust international sales, says CEO Solso.

Worldwide sales are expected to grow another 5 to 7 percent in 2007 and the company expects robust growth in most of its products and geographic markets this year outside of the North American truck market and a return to higher profitability beginning again in 2008.

“Our challenge is to remain focused on our growth strategy so that we can take full advantage of the opportunities ahead of us,” Solso said.

The company has outlined five strategic principles for continued growth: increasing the synergies among its complementary lines of business; being a low-cost producer; creating shareholder value; ensuring profitable growth and creating the right environment for employees; and emphasizing the significant number of growth opportunities available to Cummins over the next few years, including the light-duty diesel engine market in both the U.S. and China — for which Cummins will be producing as many as 1.3 million engines a year worldwide by 2012, compared to 850,000 today.

Other growth-related highlights shared by Solso at the meeting include:

— The company’s Power Generation business is expected to see additional growth in its consumer segment through the introduction of portable generators and auxiliary power units.

— The components business is forecasting strong sales growth and will reach its profit target range in fourth quarter of 2007, on the strength of increased demand for emissions-related products and technologies. Cummins is making significant investments in capacity in its exhaust aftertreatment, turbocharger and fuel systems businesses, and has launched a number of new filtration products that have been well-received by customers.

— The distribution business will increase its global footprint, providing a larger and stable earnings base in the future.

At the AGM, Cummins also announced that its shareholders had re-elected all nine Cummins directors for another year.