Despite the current global recession, Cummins is taking aggressive actions to ensure that its long-term profitable growth resumes once the economic recovery begins, Chairman and Chief Executive Officer Tim Solso told shareholders Tuesday, May 12, at the company’s annual meeting.
Speaking from the Columbus (Ind.) Engine Plant, Solso told shareholders that Cummins is preparing for little or no global economic growth through the end of 2010, but that the company expects to remain profitable and generate positive cash flow throughout the recession.
“We have reacted more quickly and decisively in this recession than in any of the previous five recessions I have experienced in my nearly 40 years at Cummins,” Solso said. “We entered this recession in the best financial shape in our history, and our actions to reduce costs, manage our cash and invest strategically in key future products give us confidence that we will emerge a stronger company.”
Solso briefly recapped the company’s 2008 performance – Cummins’ fifth consecutive year of record sales and profits – and discussed in detail the company’s response to the global recession, which has significantly affected its markets around the world.
Solso reaffirmed that Cummins expects its sales to decrease slightly more than 30 percent this year from 2008. Earnings Before Interest and Taxes are expected to be about 5 percent of sales, excluding restructuring charges associated with work force reductions announced early this year.
“We are planning for this recession to be broader, deeper and longer than any we have seen in the past, but we remain confident in the future prospects for the company,” Solso said. “Our technical leadership, global footprint and the long-range trends around energy availability, environmental regulations and global infrastructure development all play to our strengths.”
Solso also recognized former Cummins Vice Chairman Joe Loughrey, who retired in March after more than 35 years with the company, for his contributions to Cummins. “Joe has made an enormous positive impact on Cummins during his career, especially in the last decade when he was instrumental in the company’s turnaround,” Solso said. “We have been partners for most of my career at Cummins, and he will be missed.”
In the business portion of the meeting, Cummins shareholders voted to elect the eight Cummins directors standing for election to the board for another year, and also to elect Cummins President and Chief Operating Officer Tom Linebarger, who joined the board Tuesday.