Cummins to take $2 billion hit in fourth quarter from emission claims settlement

(Reuters) -Cummins said on Friday it expects to take nearly $2.04 billion charge in the fourth quarter as it reached an agreement to resolve regulatory claims on its emissions certification and compliance for some pickup truck engines.

U.S. regulators had raised concerns that some aspects of its emissions systems may reduce the “effectiveness” of emissions control systems and act as defeat devices. Such systems monitor and control an engine’s air and fuel ratio and overall emission output.

“The company has seen no evidence that anyone acted in bad faith and does not admit wrongdoing,” Cummins (NYSE:) said in a statement.

Cummins first disclosed a review in 2019 and has already recalled certain RAM trucks with its powertrains. It has previously accrued $59 million as estimated costs for executing the recalls.

The company, which counts PACCAR (NASDAQ:), Daimler (OTC:) Trucks North America and Stellantis (NYSE:) as its customers, said about $1.93 billion of the total payments is expected to be made in the first half of next year.

The governmental entities involved are the U.S. Environmental Protection Agency, the California Air Resources Board, the Environment and Natural Resources Division of the Department of Justice and the California Attorney General’s Office.