Cummins Q3 Profit Falls 33.7% Behind Accelera Writedown
US Truck Engine Demand Plummets, With Worse to Come
Key Takeaways:
- Cummins’ third-quarter 2025 profit fell 33.7% to $536 million after a $240 million writedown on its Accelera electrolyzer unit and weak North American truck engine sales.
- Power generation and data center demand offset declines in the engine and components divisions, with total revenue slipping 2% year over year to $8.32 billion.
- Executives warned that North American truck engine sales will drop another 15% in the fourth quarter and said further Accelera writedowns are possible amid trade policy uncertainty.
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Cummins’ profit in the fell 33.7% on the back of a $240 million writedown on Accelera‘s electrolyzer business and plummeting North American truck engine sales.
A jump in revenue at divisions serving the power generation and data center segments underpinned results in the most recent quarter and will continue to do so for the foreseeable future, executives said.
But on-highway truck and engine sales in North America are set to fall 15% in the fourth quarter compared with Q3, Chief Financial Officer Mark Smith warned analysts and investors during the company’s Nov. 6 earnings call.
Columbus, Ind.-based Cummins reported net income of $536 million in the three months that ended Sept. 30, compared with $809 million in the year-ago period. The results include $240 million of Accelera non-cash charges.
“Cummins delivered strong operating results in the third quarter, driven by profitable growth in our power systems and distribution segments, due in part to continued rising demand for backup power for data centers,” CEO Jennifer Rumsey said in comments accompanying the results.
“Effective cost management across the company helped navigate through the anticipated sharp decline in the North American truck market,” Rumsey added.
Smith told analysts the third quarter had played out as expected in a “tale of two economies.”
Cummins’ Q3 revenue of $8.32 billion decreased 2% from $8.46 billion a year earlier.
However, engine division sales fell 11% to $2.61 billion in the most recent quarter from $2.91 billion in Q3 2024.
Revenue in North America decreased 24% year over year and international sales were flat, Cummins said without providing any figures, largely as a result of weaker medium- and heavy-duty truck demand in the U.S.
Cummins’ heavy-duty truck engine sales revenue decreased 24.4% to $772 million from $1.02 billion a year earlier. Medium-duty truck and bus engine sales revenue fell 26.9% to $784 million from $1.07 billion.
Heavy-duty truck engine sales totaled 22,400 units in the most recent quarter, slumping 30.9% compared with 32,400 units a year earlier. Medium-duty truck and bus engine sales totaled 63,100 units in Q3, a decline of 16.6% compared with 75,700 units in the year-ago period.
Rumsey told analysts Cummins expects the medium- and heavy-duty truck engine market weakness to persist at minimum through the fourth quarter.
The fourth quarter could mark the bottom of the cycle for engine and truck demand, but it will depend on trade policy and macroeconomic variables, she said.
Smith added: “I wish I could be more bullish, and say we’re super confident. We feel like we’re getting close to the bottom of the trough on on-highway. We feel — given how long it’s been and how far it’s been down — that it’s a question of time in a cyclical business. But it’s not imminent that it’s going to turn up.”
One potential trade policy headwind for demand is the Trump administration’s Section 232 truck and parts import tariffs, which took effect Nov. 1.
Cummins is still assessing the impact of these Section 232 tariffs, the company’s top executive said.
When Morgan Stanley Head of U.S. Machinery and Construction Equity Research Angel Castillo asked Rumsey and Smith to quantify the cost impact, the latter replied: “I tell you what, we’ve got the same questions that you’ve got.”
“We need to know a lot more detail than we’ve currently got to be able to predict that,” said Smith, adding: “Honestly, all this modeling’s important in some regards, but the actual details, there’s five or six questions we need answers to to even be able to calculate it, let alone communicate it.”
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Meanwhile, the company’s components division saw sales revenue total $2.33 billion in the most recent three-month period, down 15% from $2.72 billion a year earlier.
Sales revenue for drivetrain and braking systems totaled $917 million in Q3, a decrease of 18.8% compared with $1.13 billion in the year-ago period. Revenue from emissions solutions fell 8.8% to $788 million from $864 million in the same period 12 months earlier.
Cummins’ distribution division saw revenue increase 7% to $3.17 billion from $2.95 billion as revenue in North America increased 13% due to increased demand for power generation.
The power systems division posted an 18% jump in revenue to $2 billion from $1.69 billion as revenue in North America increased 20% and international sales increased 17% on the back of data centers’ power generation needs in North America, India and China.
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Accelera reported sales of $121 million, up 10% from $110 million in the year-ago period on the back of higher electric bus demand.
Cummins is undertaking a strategic review of Accelera’s electrolyzer business and more writedowns may be possible, Rumsey said.
“It’s fair to describe the decline in [electrolyzer] demand as sharp and dramatic,” Smith said, adding later: “It dried up faster than anything I’ve seen in my career. Internally, it surprised us to the downside.”
Cummins said it will not provide an outlook for revenue or profitability for the remainder of 2025 due to the ongoing market uncertainty.
