DOW JONES NEWSWIRES
Cummins Inc.'s (CMI) first-quarter net income plunged 93% as the
engine maker lowered its full-year outlook amid its continuing
struggle to right-size operations in the face of weak North
American and European trucking and construction markets.
The company, which has slashed its professional work force by
10%, began a sharp about-face last fall after adding thousands of
employees and posting record results for much of 2008. It has since
cut hours, frozen salaries and reduced executive pay amid a sharp
drop in demand for heavy-duty trucks.
Cummins now expects full-year sales to be off more than 30% from
2008 numbers.
"The first quarter was, as we expected, extremely challenging,
and we do not see the economy or our markets improving for the
remainder of 2009," Chairman and Chief Executive Tim Solso said. He
added the recession has affected all of the company's markets
around the world.
Solso said the company was confident its cost-cutting actions
would allow it to post a "reasonable profit" this year.
Meanwhile, Cummins's net income fell to $14 million, or 4 cents
a share, from $202 million, or 97 cents a share, a year earlier.
The latest results include a $66 million restructuring charge.
Excluding items, earnings were 26 cents.
Revenue slid 30% to $2.44 billion.
Analysts polled by Thomson Reuters expected earnings of 23 cents
a share on revenue of $2.65 billion.
Gross margin slipped to 18.2% from 20.4%.
The company said all four of its segments experienced sales
decreases, with the largest decline in the engine and components
segments.
Shares closed Wednesday at $33.49 and haven't traded premarket.
The stock has fallen 45% in the past year despite a rebound in the
last several months.
-By Melissa Korn and Kerry E. Grace, Dow Jones Newswires;
201-938-5089; kerry.grace@dowjones.com
