Cummins Profit Falls Less Than Expected
May 03 2016 - 9:54AM
Dow Jones News
By Joshua Jamerson
Cummins Inc.'s profit fell less than expected in the latest
quarter, as the diesel engine maker continued to cut costs amid
weak market conditions.
Lower production in the North American heavy-duty truck market,
as well as weak global demand for off-highway and power generation
equipment, dented sales. The company has also been weighed by a
stronger U.S. dollar that makes its products more expensive
overseas. Currency effects shaved 3% off its top line in the
quarter ended April 3.
Cummins has been pressured by sliding demand for trucks in North
America, anemic commodity prices and weak economic growth in some
developing overseas markets. Cummins, which supplies diesel engines
for Ram and Nissan Motor Co. pickup trucks, has faced tough
business conditions in markets such as China and Brazil.
Rich Freeland, Cummins's chief operating officer, said that
"benefits from restructuring actions, material cost reduction
projects and lower warranty costs all helped to mitigate the impact
of lower sales."
Research, development and engineering expenses fell 15% in the
quarter while selling, general and administrative expenses fell
5.2%.
Over all, Cummins reported a profit of $321 million, or $1.87
cents a share, down from $387 million, or $2.14 a share, a year
earlier.
Revenue declined 9% to $4.29 billion. Analysts expected $1.78 in
per-share earnings and $4.31 billion in revenue.
Sales in Cummins' engine segment, its largest, declined 10%,
while sales in its smaller power distribution segment declined 19%.
Sales in the components unit slipped 5% while revenue from its
distribution division fell 1%.
In October, the company said it would trim about 2,000
white-collar jobs, and has said it would evaluate whether more
aggressive action were needed. In February it scaled back the range
of its light-duty engines it planned to manufacture in North
America.
Cummins on Tuesday backed its revenue forecast for the year,
projected a sales decline between 5% and 9%.
Shares were unchanged in premarket trading.
Write to Joshua Jamerson at joshua.jamerson@wsj.com
(END) Dow Jones Newswires
May 03, 2016 09:39 ET (13:39 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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