2010 Sustainability Report - Cummins.com

Four key trends for future growth
Cummins’ work to remain strong during the
global recession, along with a number of longterm
industry and market trends working in its
favor, has positioned the Company for a period
of sustained profitable growth in the future.
Here are those key trends:
Tougher emissions standards: Tougher emission
standards are being implemented around the world,
which plays to the Company’s strength as the global
leader in emissions technology research and design.
The globalization of business: Cummins has a
leadership position in large international markets
such as China, India and Brazil and a strong global
distribution network that gives the Company
access to growing markets around the world.
The price and availability of energy:
Fuel prices are expected to continue to increase,
which should boost demand for Cummins’ fuelefficient
diesel engines. In addition, the demand
for electricity is expected to outpace supply
worldwide over the next several years, creating
opportunities for the Company’s power
generation business.
Infrastructure growth around the world:
A significant increase in infrastructure spending
worldwide over the next two decades,
especially in large emerging markets, should
increase demand for Cummins’ products that
serve industrial and power generation markets.
That increase in demand led to an expected
corresponding drop in volumes in the first quarter
of 2010. Medium- and heavy-duty North American
engine shipments in the first quarter of this year were
90 percent lower than the fourth quarter of last year.
That volatility was very disruptive to the Company’s
operations, but employee efforts to manage capacity
and improve productivity allowed Cummins to
profitably navigate this challenging period.
Looking ahead
The Company reported strong financial results for
the first quarter of 2010 thanks in large part to our
leadership position in China, India and Brazil.
International sales accounted for 64 percent of the
Company’s consolidated revenues in the first quarter
and our consolidated international sales rose
27 percent from the first quarter of 2009.
As the U.S. and European markets recover, 2010
is expected to be a much better year for Cummins.
Sales are expected to reach $12 billion by the end
of 2010, an 11 percent increase from 2009, with
EBIT, excluding restructuring and other charges,
of 10 percent of sales.
The Company also expects to invest $400 million in
capital projects in 2010, mostly to support initiatives
related to new products and capacity expansion.
In March 2010, Cummins publicly shared its five-year
outlook. The Company expects average annual sales
growth of 13 percent a year from 2010-2014, about
twice the annual growth rate over the last 30 years.
Over that period, the Company expects to earn an
average EBIT of 10 percent of sales.
106 Cummins Inc. Sustainability Report 2010