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U.S. Heartland Manufacturers Profit Abroad Melinda Peer, 04.30.08, 5:10 PM ET
International business drove first-quarter sales growth for diversified industrial manufacturer Ingersoll-Rand and engine maker, Cummins, on Wednesday. Overseas business accounted for 57.0% of Cummins' $3.5 billion first-quarter sales and helped to offset both rising commodity prices and lagging U.S. markets. The engine-and-electric-power-systems manufacturer said demand for commercial generators surged in India, Britain, Asia and the Middle East while turbochargers and exhaust after-treatment products were hot items in North America and Europe. Net income rose 33.0%, to $190.0 million, or 97 cents a share, from $143.0 million, or 71 cents a share, in the prior year. Sales rose 23.0%, to $3.5 billion from $2.8 billion in 2007's first quarter. The company's distribution business, which grew considerably in Europe, the Middle East and Asia, posted the largest growth, of 44.0%, followed by a 25.0% sales increase in its engine and components segment and 17.0% growth in sales of power-generation systems. The results surpassed analysts' expectations for earnings of 89 cents a share and sales of $3.3 billion. "While we are monitoring the U.S. economy closely, we intend to continue investing in opportunities around the world to fuel further growth in the future," said Chairman Tim Solso. Ingersoll-Rand also credited higher international demand for the quarter's 9.5% sales growth. Net earnings, however, fell 16.5%, to $181.6 million, or 66 cents a share, from $217.5 million, or 70 cents a share, a year ago. Analysts expected earnings of 73 cents a share and sales of $2.1 billion. Ingersoll-Rand has been working to transform itself from being dependent on its capital-intense heavy machinery business to creating a more diverse product mix and a greater international presence. The compnay is currently finalizing its acquisition of Trane, a heating and air conditioning company. Ingersoll-Rand expects robust growth in developing economies to offset flat performance in North America for mid-single-digit full-year sales growth. Cummins (nyse: CMI - news - people )' stock gained $5.06, or 8.8%, to $44.91, and Ingersoll-Rand (nyse: IR - news - people ) added $2.35, or 5.5%, to $44.91, during afternoon trading on Wednesday. More On This Topic
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