Cummins(US:CMI)2025-08-05 16:59Financial Performance - Cummins reported net sales of $8.643 billion for Q2 2025, a decrease of 2% compared to $8.796 billion in Q2 2024[116]. - Net income attributable to Cummins Inc. for Q2 2025 was $890 million, or $6.43 per diluted share, compared to $726 million, or $5.26 per diluted share in Q2 2024[116]. - For the first half of 2025, net income attributable to Cummins Inc. was $1.7 billion, or $12.38 per diluted share, down from $2.7 billion, or $19.42 per diluted share in the same period of 2024[117]. - Worldwide revenues decreased by 2 percent for the six months ended June 30, 2025, compared to the same period in 2024, primarily due to weaker demand in on-highway truck markets and the divestiture of Atmus[119]. - Net income attributable to Cummins Inc. for the six months ended June 30, 2025, was $1,714 million, a decrease of $1,005 million or 37 percent compared to the same period in 2024[134]. Sales and Market Trends - U.S. and Canada net sales decreased by 6% in Q2 2025, primarily due to lower demand in heavy-duty and medium-duty markets[118]. - International sales increased by 5% in Q2 2025, driven by higher demand in Europe and China, despite lower sales in Asia Pacific[118]. - The Engine segment sales decreased by 8 percent, while the Power Systems segment sales increased by 19 percent due to higher demand in power generation markets[135]. - Heavy-duty truck sales in Q2 2025 decreased by $208 million (18%) due to weaker demand, with shipments down 26% in North America[162]. - Total unit shipments for the Engine segment in Q2 2025 decreased by 27,300 units (16%) to 147,000 units compared to Q2 2024[159]. Cost and Expenses - Cash generated from operations for the six months ended June 30, 2025, was $782 million, compared to a cash usage of $575 million in the same period of 2024[123]. - Selling, general and administrative expenses decreased by $49 million and $117 million for the three and six months ended June 30, 2025, respectively, mainly due to lower compensation expenses[141]. - Research, development and engineering expenses decreased by $22 million and $47 million for the three and six months ended June 30, 2025, respectively, attributed to lower compensation expenses[142]. - Interest expense decreased to $87 million and $164 million for the three and six months ended June 30, 2025, respectively, due to lower weighted-average interest rates[148]. Dividends and Shareholder Returns - The Board of Directors authorized a quarterly dividend increase of approximately 10 percent from $1.82 per share to $2.00 per share in July 2025[125]. - Dividends paid during the six months ended June 30, 2025, amounted to $502 million, with a 10% increase in the quarterly dividend authorized in July 2025[196]. Debt and Financing - The debt to capital ratio at June 30, 2025, was 38.7 percent, up from 38.4 percent at December 31, 2024, due to higher debt balances[124]. - The company entered into a new 5-year credit agreement allowing borrowing of up to $2.0 billion, and a new 3-year credit agreement for the same amount[127][128]. - Total debt as of June 30, 2025, was $8,111 million, with total debt as a percentage of total capital at 38.7%[180]. Operational Highlights - Strong growth in power generation markets, particularly in data center and commercial sectors, contributed to the increase in net income[116]. - Cummins continues to focus on electrification and alternative power technologies, with efforts in the Accelera segment aimed at commercializing these innovations[110]. - The company is navigating a challenging market environment, including geopolitical risks and fluctuating demand across various sectors[111]. - The uncertain tariff environment has created significant market volatility, potentially impacting future demand for capital goods and supply chain costs[178]. - The company is proactively taking steps in its supply chain to mitigate impacts from tariff-related volatility[178]. Cash Flow and Investments - Net cash provided by operating activities increased by $1.4 billion for the six months ended June 30, 2025, compared to the same period in 2024, primarily due to lower working capital requirements of $1.2 billion[182]. - Net cash used in investing activities decreased by $191 million for the six months ended June 30, 2025, primarily due to the absence of cash associated with the Atmus divestiture[183]. - Capital expenditures for the six months ended June 30, 2025, were $393 million, with an estimated $1.4 billion to $1.5 billion planned for 2025, over 65% of which is expected to be invested in North America[197]. Pension and Retirement Plans - The investment gain on U.S. pension trusts was 4.6 percent, while the U.K. pension trusts experienced a loss of 0.8 percent in the first six months of 2025[132]. - The global pension plans were 115% funded at December 31, 2024, with U.S. defined benefit plans at 117% funded[199]. - The company has a maximum remaining required contribution of $551 million to the Amplify Cell Technologies LLC joint venture, expected to be made by the end of 2028[201].