DOW JONES NEWSWIRES
Engine maker Cummins Inc. (CMI) posted a 55% decrease in
fourth-quarter net income amid sharp demand drops and a
strengthening U.S. dollar as the company projected continued sales
declines this year.
Cummins has continued to cut costs as it struggles with slumping
demand, particularly in the hard-hit North American and European
truck and construction markets. The engine maker has implemented a
hiring freeze, reduced company officers' 2009 salaries and
temporarily shut plants. Cummins said Tuesday that by the end of
March, it will have reduced its global workforce by about 6% since
the beginning of the fourth quarter.
Chairman and Chief Executive Tim Solso described the quarter's
rapid drop in demand as "a major disappointment," adding the
company moved quickly to lower costs and tightly manage capital
spending. He projected overall economic conditions wouldn't improve
in 2009 and that sales this year would be about 20% lower than last
year.
Though Cummins still expects "solid profits" this year, sales
are forecast to drop across the board, with the largest decline
expected to come from the components and engine segments. The
overall drop is slated to be 20%; analysts surveyed by Thomson
Reuters a 10% decline to $12.78 billion.
Meanwhile, Cummins reported fourth-quarter net income of $89
million, or 45 cents a share, compared with $198 million, or $1 a
share, a year earlier.
Net sales fell 6.5% to $3.29 billion.
Analysts polled by Thomson Reuters had expected earnings of 42
cents a share on revenue of $3.2 billion.
Gross margin slipped to 18.7% from 19.4%.
Cummins shares closed Monday at $24.30 and there was no
pre-market trading. The stock has fallen two-thirds the past six
months.
-By Shirleen Dorman, Dow Jones Newswires; 201-938-2310;
shirleen.dorman@dowjones.com
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