Cummins posts sharply lower first-quarter earnings

Cummins net income dropped 96 percent to $7 million, or 4 cents per share, for the three months ended March 29, from $190 million, or 97 cents per share, during the year-earlier period.

The Associated Press

4/30/2009

COLUMBUS, Ind. — Engine maker Cummins Inc. reported sharply lower first-quarter income Thursday due to weaker demand amid the global recession and the cost of laying off thousands of workers.

Net income dropped 96 percent to $7 million, or 4 cents per share, for the three months ended March 29, from $190 million, or 97 cents per share, during the year-earlier period.

The results included a $66 million charge for costs related to job cuts. During the quarter, Cummins announced plans to reduce its work force by more than 4,100 employees and contract workers due to lower demand for its products. As of Dec. 31, Cummins employed about 39,800 people worldwide, according to the company’s annual report. Cummins also has slashed spending.

Excluding the restructuring charge, Cummins’ profit was $51 million, or 26 cents per share.

Sales fell 30 percent to $2.44 billion from $3.47 billion during the same period in 2008. Sales fell across Cummins’ businesses, with its engine and components units showing the sharpest declines.

Wall Street analysts expected earnings of 23 cents per share on revenue of $2.65 billion, according to a survey by Thomson Reuters. Those estimates typically exclude one-time charges.

“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,” Cummins Chairman and Chief Executive Tim Solso said in a statement.

Cummins revised its outlook for the 2009, saying it now expects sales to be slightly more than 30 percent lower than 2008 and earnings before interest and taxes to be 5 percent of sales, excluding the restructuring charge.

Shares of Cummins climbed $2.38, or 7.1 percent, to $35.87 in morning trading Thursday.

Kevin Jones of The Trucker staff can be reached for comment at kevinj@thetrucker.com.