Cummins Inc. delivered better-than-expected earnings results for the fourth quarter of last year as well as for 2022 overall. The results left market watchers optimistic, and even if you don’t own stock in Cummins, the company’s performance is a powerful driver and barometer of our region’s economy.
The Republic’s Andy East reported Tuesday on Columbus-based Cummins’ gangbusters fourth quarter. Corporate earnings for October through December were $7.77 billion, up from $5.8 billion during the same quarter in 2021 and beating the Bloomberg estimate of $7.24 billion. Net sales were up 32.8%.
“Book it as a solid quarter,” Craig Kessler, president and chief investment officer at Columbus-based Kessler Investment Group, told East after the company released earnings. “It bodes well for the rest of this year, and I think it’s going to be a continuation of the path towards normal that we’ve all been sensing here in Columbus since COVID. I think they’re moving in the right direction, and we should all feel confident and proud of what Cummins has delivered.”
We can’t improve on that sentiment, but in reading what Cummins and market experts had to say about the quarterly and annual earnings reports, a couple of things stood out.
The company, under CEO Jennifer Rumsey’s first-year leadership, is continuing to accelerate its transition to a zero-emission, carbon-free future. That strategy and vision pursued through a seamless transition in leadership is literally paying dividends.
Yet that isn’t to say Cummins’ core business isn’t booming, too. Quarterly and year-over-year revenue was up in every division of the business, the company reported. That’s a remarkable feat in a global environment still dealing with the remnants of a pandemic, supply chain disruptions, the end of business with Russia and declining demand from China.
Cummins has pursued business as usual through all those challenges, and the results — including record earnings last year — benefit the entire community and region.
“We did so with a focus on the exciting opportunity in front of us to lead the industry to a broader clean economy and do so in a way that is best for our stakeholders and the planet,” Rumsey said. “Decarbonization is a growth opportunity … uniting our business and climate goals.”
And in that regard, the numbers tell a story too.
While the New Power segment remains a small fraction of Cummins’ overall bottom line, its share is growing dramatically. This division focused on hydrogen and carbon-free systems booked a 70% increase in revenue in 2022 and a whopping 120% gain in the fourth quarter of last year compared to 2021.
Roger Lee, a senior research analyst with Columbus-based Kirr, Marbach and Co., told East Cummins’ outlook for this year is strong.
“They’re calling for 12% to 17% growth, and it’s not like 2022 is a bad year either,” Lee said. “… They made it very clear (that) for the first half year, the core market is going to be very strong.”
That’s great news for Cummins, its workers and the communities where it does business. The market likes the company’s direction, too, as one final figure attests: As of this week’s earnings report, Cummins’ stock price was up almost 30% in the last six months.
