Cummins 2Q14 Earnings Call Notes

This post is part of a series of posts called “Company Notes.” These posts contain quotes and exhibits from earnings calls, conference presentations, analyst days and SEC filings. Full transcripts can be found at Seeking Alpha

Construction demand in China has not rebounded

“Demand in construction markets has softened already from already weak levels as the pace of investment in infrastructure has not rebounded in China. ”

Conditions still weak in India

“Second quarter revenues in India, including joint ventures, were $293 million, down 14% year-over-year as conditions remained weak in most end markets. Enthusiasm over the election results in May and the prospect of pro-business reforms by the new government have not yet translated into significant change in orders in our key markets.”

Brazil weak too

“We now expect our full-year revenues in Brazil to decline by 15% to 20%, down from our previous forecast of a decline of 15%. Power Generation and Distribution revenues have held up relatively well in the weak environment in Brazil.”

More on China

“the underlying economic conditions in China have not been that robust. And so that has meant that although truck markets have improved, generally speaking, the demand is not as robust as it was before — when they were doing a lot of infrastructure building. And so those combination of factors is why we lowered the second half.”

We’ve lowered our long term expectations for China

“We definitely have lowered our long-term growth rates for China. A couple of investor conferences ago, we were saying, hey, we thought we might be growing 9% to 10% for several years. We have of course lowered that down and now what we hear from even from China was a pretty optimistic view is sort of 7% to 8% and increasingly our number is more like 7%.”

Our head of India thinks it’ll be at least until the end of the year before you start to see real improvement

“The Head of our India Operations, Anant, believes that it will be still through the end of the year before — we won’t see much improvement maybe until beginning of next year. I think he’s basing that on a bunch of consensus. He think sentiment will continue to improve, it’s pretty good right now and he thinks it’s going to continue to improve. But before you can see significant improvement in the markets, it may be that long before you see it.

Again people have different points of view, but that’s his is the most balanced I’ve heard on the optimistic and pessimistic side.”