Engine Maker Cummins' 3Q Net Down 59%; Estimates Raised
DOW JONES NEWSWIRES
Cummins Inc.'s (CMI) third-quarter earnings fell 59% following last year's
record results as the engine maker struggles in the face of weak North American
and European trucking and construction markets.
But sales rose 4% from the second quarter, which the company attributed to
improved demand from China and a short-term boost in some segments in the U.S.
Results also topped analysts' expectations and Cummins boosted its 2009
forecast, seeing sales falling slightly less than 30% from last year and
earnings before interest and taxes making up 6% of sales. The company had seen a
sales drop of slightly more than 30% and EBIT being 5% of sales.
"Given the continued weakness in many of our markets, the company performed
extremely well in the third quarter," said Chairman and Chief Executive Tim
Solso. "The decisive actions we have taken over the past several months have
allowed us to remain profitable, generate cash and invest in the company's
future in the face of the worst recession in decades."
Cummins has cut about 9,000 jobs--or about 15% of its global work force--and
cut other costs since late last year amid the demand slump.
Solso was also remained pessimistic near-term, saying, "We expect the economic
climate to remain challenging until late 2010--especially in the United States
and Europe." But he added Cummins is "extremely well positioned to take
advantage of a number of opportunities and market trends that offer the
potential for significant long-term growth."
Third-quarter profit tumbled to $95 million, or 48 cents a share, from $229
million, or $1.17 a share, a year earlier. Net sales fell 31% to $2.53 billion.
Analysts polled by Thomson Reuters expected earnings of 37 cents on revenue of
$2.48 billion.
Gross margin fell to 19.9% from 22.2% amid the sales slump.
Shares closed Thursday at $45.92 and didn't trade premarket. The stock is up
72% this year.
-By Mike Barris and Kevin Kingsbury, Dow Jones Newswires; 212-416-2330;
mike.barris@dowjones.com
(END) Dow Jones Newswires
10-30-090806ET
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