Cummins Posts Lower Q4 Profit on Weak Truck Demand
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Weak global heavy-duty truck market demand plus a reorganization of the Accelera decarbonization technology unit hurt Cummins profits in the fourth quarter of 2024, the company said Feb. 4.
Columbus, Ind.-based Cummins posted a $418 million profit in the three months that ended Dec. 31 after taking a $312 million charge on the Accelera strategic review.
In the final quarter of 2023, Cummins posted a $1.431 billion loss after paying a $2 billion fine to settle U.S. Department of Justice charges under the Clean Air Act related to the installation of devices that bypassed emissions sensors on engines in hundreds of thousands of Class 2B and Class 3 Ram trucks.
Overall, the company’s most recent quarter revenue totaled $8.447 billion, a decrease of 1% from $8.543 billion in the same quarter in 2023.
Cummins Reports Strong Fourth Quarter and Full Year 2024 Re…
Revenue from heavy-duty engine sales totaled $980 million in the most recent quarter, down 6.8% compared with $1.052 billion in the year-ago period.
Cummins shipped 29,400 heavy-duty engines in Q4, down 6.8% compared with 34,500 in the year-ago period.
Revenue for the entire engine division totaled $2.72 billion in Q4, down 2% compared with $2.779 billion a year earlier as sales decreased 2% in North America and 3% in international markets.
Light-duty engine sales, the company said, slumped 27.4% to 36,000 from 49,600 a year earlier.
Sales by the Accelera unit, meanwhile, actually increased 23% year on year in the most recent quarter to $100 million from $81 million.
However, the division endured a strategic review after a slower-than-expected adoption of some zero-emission technologies. Cummins is refocusing investments on what it deems the most promising technology paths as a result.
“This business has all along been about being agile,” CEO Jennifer Rumsey said during a Feb. 4 call with analysts, adding that Cummins “looked at where we see the market moving.”
Cummins continues to focus on battery-electric vehicles, but saw a slowing of demand for electrolyzers plus other hydrogen technologies and decided to act, the company’s top executive said. An electrolyzer is a device that uses electricity to divide water into hydrogen and oxygen molecules. The hydrogen is then used to fuel vehicles or power generation.
Cummins launched the Accelera brand in March 2023. (Cummins Inc.)
The company took the charge in Q4 because it does not yet have a line of sight on when the Accelera business will break even, Chief Financial Officer Mark Smith added later in the call.
Cummins launched the Accelera brand in March 2023.
The company spun off its Atmus filters unit later in 2023. Atmus’ Fleetguard products include fuel, air, hydraulic and other filters for commercial vehicles as well as agricultural, construction, mining and power-generation equipment.
As a result of the spinoff and weak heavy-duty truck demand, Q4 saw revenue at Cummins’ components division fall 17% to $2.641 billion from $3.191 billion.
The unit’s drivetrain and braking systems revenue fell 0.9% to $1.114 billion in Q4 from $1.124 billion in the year-ago period. Sales of emissions solutions totaled $825 million in the most recent three-month period, down 10.5% compared with $922 million a year earlier.
Cummins’ two other units, however, saw a jump in sales, largely on the back of accelerating demand for power generators, switchgear and transfer switches as a result of the inexorable growth of data centers needed for cloud computing and artificial intelligence applications.
Rumsey
The company’s distribution segment saw revenue rise 13% to $3.068 billion in Q4 from $2.713 billion. Sales by the power systems segment ramped up 22% to $1.743 billion from $1.429 billion, with a 42% jump in North America.
Looking forward to 2025 though, Cummins is much more optimistic about demand for engines, although not so much from North American heavy-duty truck buyers.
“In 2025, we anticipate that demand will be slightly weaker in the North America on-highway truck markets, particularly in the first half of the year, but offset by strength in other key markets. Despite a relatively flat revenue forecast and relative weakness in the key North America truck markets, we expect to improve profitability and cash flow,” said Rumsey.
One bright spot will be the U.S. truckload sector, she told analysts, where Cummins expects an uptick in tractor and therefore heavy-duty engine demand.
Cummins also expects there to be something of a boost from the pre-buy in 2025, but not a huge one, Rumsey said, adding that the company was looking forward to national emissions standards being in place.
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U.S. Environmental Protection Agency rules currently on the books will require model year 2027 heavy-duty trucks to emit no more than 0.035 gram of nitrogen oxides per horsepower-hour, which is expected to encourage a surge of truck purchases from the second half of 2025 onward to pre-empt the introduction of the new regulations.
Rumsey said that she does still expect the regulations to remain in place even as the Trump administration turns the federal government upside down in its first few weeks in power.
