Cummins Scales Back Light Duty Truck Production as Profit Sinks
February 04 2016 - 8:54AM
Dow Jones News
By Joshua Jamerson
Cummins Inc. reported fourth-quarter profit that came in below
Wall Street expectations as its market conditions weakened,
prompting the company to scale back production of light duty trucks
in North America.
As a result, the company recorded a $211 million charge to
adjust the book value of its light duty manufacturing assets to
fair value.
As it reported fourth quarter results, Cummins said it expects
revenues to decline between 5% and 9% in 2016. Analysts had
expected earnings a 7% drop for the year.
Cummins in October said it would trim about 2,000 white-collar
jobs, and had said it would evaluate whether more aggressive action
were needed.
Columbus, Ind.-based Cummins has been struggling for the past
several quarters with a weaker global economy--especially in China
and Brazil--and a stronger U.S. dollar that makes its products more
expensive overseas. Currency effects shaved 4% off its top line in
the fourth quarter.
"The benefits of restructuring, material cost reduction
initiatives and quality improvements combined with the launch of
new and improved products in 2016, should position the company for
stronger performance in the future, despite the challenges of a
weak macroeconomic environment," Chief Executive and Chairman Tom
Linebarger said.
For the fourth quarter, Cummins reported a profit of $161
million, or 92 cents a share, down from $444 million, or $2.44 a
share, a year earlier. Excluding one-time items, per-share earnings
fell to $2.02 from $2.56 a year ago.
Revenue declined 6% to $4.77 billion. Analysts expected $2.11 in
per-share earnings and $4.68 billion in revenue.
Shares were inactive in premarket trading.
Write to Joshua Jamerson at joshua.jamerson@wsj.com
(END) Dow Jones Newswires
February 04, 2016 08:39 ET (13:39 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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