Cummins profit falls below expectations as increased costs from supply chain constraints weigh on margins

Cummins Inc.
CMI,
+0.42%
reported Thursday fourth-quarter profit that fell below expectations while revenue topped forecasts, as increased manufacturing, logistics and material costs resulting from supply chain constraints led to lower-than-anticipated margins. The auto engine power generation products company’s stock was still inactive in premarket trading. Net income fell to $394 million, or $2.73 a share, from $501 million, or $3.36 a share, in the year-ago period. The FactSet consensus for earnings per share was $3.16. Sales inched up 0.3% to $5.85 billion, just above the FactSet consensus of $5.79 billion, but cost of sales increased 1.4% to $4.53 billion to knock gross margin down to 22.5% from 23.3%. North America sales fell 4% while international sales grew 6%. Cummins’ engine, distribution and power systems businesses saw sales rise while sales of the components business fell. For 2022, the company expects revenue growth of 6%, while the FactSet consensus of $25.87 billion implies 7.7% growth. The stock has shed 3.8% over the past three months, while the S&P 500
SPX,
+0.94%
has eased 0.9%.