Cummins, Inc. Business Report FY ended Dec. 2013

Business Highlights

Financial Overview

(in million dollars)
  Dec. 31, 2013 Dec. 31, 2012 Rate of change (%) Factors
Overall 17,301 17,334 (0.2) -
Sales by Segment
Engine segment 10,013 10,733 (6.7) 1)
Components segment 4,342 4,012 8.2 2)

-Engine segment sales in FY 2013 decreased by 6.7% due to lower demand in stationary power, heavy-duty truck and industrial businesses. Stationary power engine sales decreased due to lower demand in power generation markets. Heavy-duty truck engine sales decreased due to weaker demand in North American on-highway markets during the first half of the year compared to the recovery experienced in the first half of 2012 as trucking companies replaced aging fleets.

-Components segment sales in FY 2013 increased by 8.2% primarily due to increased sales within the emission solutions business, mainly related to improved on-highway OEM and aftermarket demand in North America and the impact of the 2012 acquisition of Hilite experienced in Western Europe, which resulted in $77 million of related incremental sales in 2013 compared to 2012.

US Production

-In October 2013, the Company announced it will begin producing the ISV5.0, a new 5-liter V8 diesel engine designed to power pickup-and-delivery vehicles, other light- and medium-duty trucks, school buses and motorhomes for the North American market. The ISV5.0's fuel system and Cummins VGT Variable Geometry Turbocharger contribute to a peak torque of 560 lb-ft and quick throttle response. Ratings from 200 (149 kW) to 275 horsepower (205 kW) are available. The ISV5.0, along with the 5.0L V8 Turbo Diesel for pickup trucks, will be manufactured at the Columbus Engine Plant in USA. Production of the ISV5.0 will start during the fourth quarter of 2014. (From a press release on October 4, 2013)

-In August 2013, the Company announced the production of the 1.5 millionth engine at its Jamestown Engine Plant (JEP) in Jamestown, New York, USA. The JEP typically produces more than 100,000 engines annually in recent years, and accounts for 12 percent of Cummins total engine production in 2012. It produces many of the Cummins Heavy-Duty engines including the ISX15, the ISX12 and the ISM diesel engines. The ISX15 engine continues to be the top-selling engine in the heavy-duty truck market with Jamestown total production exceeding 677,000 ISX15 engines since 2003. The Heavy-Duty Engine Plant is also in full production with the new high-performance Cummins Westport ISX12 G Heavy-Duty natural gas engine. (From a press release on August 15, 2013)

Engine Installation

-In Octpber 2013, Detroit Diesel Corporation announced the availability of its Detroit Connect solutions for all new Freightliner Cascadia truck models equipped with Cummins diesel and natural gas engines. Offered as a factory-installed option beginning Q1 2014, the Detroit Connect suite of telematics solutions – which includes Visibility fleet software and the new On-Board Tablet -- provide the critical link between vehicles, drivers and fleet managers, enhancing uptime and performance. (From a press release on October 21, 2013)

SuperTruck Project

-Modine Manufacturing Company is developing a series of compact heat exchangers designed to capture waste heat from the exhaust stream of a diesel engine and convert this heat into useful power to improve engine efficiency and reduce CO2 emissions. As part of this development effort, Modine has been involved in a Department of Energy-sponsored program called SuperTruck and has provided these heat exchangers to a Cummins-Peterbilt concept vehicle for comprehensive road testing. During this road testing, the vehicle achieved 10.7 miles per gallon. The truck also demonstrated a 75 percent increase in fuel economy in head-to-head testing over a 24-hour time period compared with a 2009 baseline truck. (From a press release on February 21, 2014)

-In February 2014, the Company and Peterbilt Motors Co., a division of PACCAR, announced that the latest version of their SuperTruck demonstration tractor-trailer achieved 10.7 mpg last month under real-world driving conditions. Cummins has partnered with Peterbilt for the SuperTruck project. The project objectives have included development and demonstration of a highly efficient and clean diesel engine, an advanced waste heat recovery system, an aerodynamic tractor and trailer combination and a lithium ion battery-auxiliary power unit, to reduce engine idling. The Cummins-Peterbilt SuperTruck uses the Class 8 Peterbilt Model 579, powered by a Cummins ISX15 engine. Eaton Corp. also part of the Cummins-Peterbilt SuperTruck project team, is developing a next-generation automated transmission that improves fuel efficiency in heavy-duty trucks. (From a press release on February 18, 2014)


R&D Expenditure

(in million dollars)
  Dec. 31, 2013 Dec. 31, 2012 Dec. 31, 2011
Overall 713 728 629
Engine 416 433 397
Components 218 213 175

R&D Structure

-The Company operates 19 technical centers around the world.

Product Development

-In March 2013, Eaton Corporation and the Company unveiled a new powertrain package for the North American heavy duty truck market that is expected to deliver 3-6 percent fuel economy improvements, lower preventative maintenance costs, and total lifecycle cost improvements. The new product integrates an Eaton Fuller Advantage Series automated transmission with new Cummins ISX15 SmartTorque2 ratings. The product will be available in the fall of 2013. (From a press release on March 11, 2013)

Investment Activities

Capital Expenditure

(in million dollars)
  Dec. 31, 2013 Dec. 31, 2012 Dec. 31, 2011
Engine 372 399 339
Power Generation 141 95 87
Components 106 134 141
Distribution 57 62 55
Total 676 690 622

Investment Activities

-In April 2013, the Company held a groundbreaking ceremony for a new plant and office building for the Company's Cummins Marktheidenfeld (CMHF) business in Germany. The new facility will house a new plant where Cummins Emission Solutions, a subsidiary of Cummins Inc., will design and manufacture selective catalytic reduction (SCR) dosing systems for diesel engines. Construction is expected to begin later this summer with completion in early 2014. Cummins acquired the SCR dosing business from Hilite International in July 2012. (From a press release on April 23, 2013)