Cummins Cuts Revenue Forecast on Weak Market Outlook
August 02 2016 - 8:52AM
Dow Jones News
By Joshua Jamerson
Cummins Inc. said profit fell less than expected in the second
quarter, helped by its cost-cutting program, but lowered its
full-year revenue estimate as market conditions become even more
dire.
Cummins said it now sees full-year revenue down 8% to 10% after
it previously guided for a revenue drop between 5% and 9%.
Lower production in North America as well as weak global demand
for off-highway and power generation equipment has dented sales in
recent quarters, and Cummins said an even lower outlook in those
areas led to its revenue forecast cut. The company has also been
hurt by a stronger U.S. dollar that makes its products more
expensive overseas. Currency effects shaved 1% off its top line in
the quarter ended July 3.
Cummins also been pressured by weak commodity prices and soft
economic growth in some developing overseas markets. The company
has faced tough business conditions in markets such as Brazil.
Over all, Cummins reported a profit of $406 million, or $2.40 a
share, down from $471 million, or $2.62 a share, a year earlier.
Revenue declined 9.7% to $4.53 billion. Analysts expected $2.16 in
per-share earnings and $4.5 billion in revenue.
Sales in Cummins' engine segment, its largest, skidded 14%,
while sales in the distribution segment rose 3%. Sales in the
components unit declined 8% and revenue from its smaller power
systems division slipped 16%.
Research, development and engineering expenses fell 6.6% in the
quarter while selling, general and administrative expenses fell
2.4%.
Shares slipped 0.3% to $121.40 in premarket trading.
Write to Joshua Jamerson at joshua.jamerson@wsj.com
(END) Dow Jones Newswires
August 02, 2016 09:37 ET (13:37 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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