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