Cummins posts 81 percent drop in profit

Cummins attributed its falling profits to sharply lower volumes of engines and powertrain components. Engine sales fell 45 percent to $1.31 billion, while components sales sank 41 percent to $502 million.

The Associated Press

7/31/2009

COLUMBUS, Ind. — Engine maker Cummins Inc. said Thursday its second-quarter earnings plunged 81 percent as orders for new engines continued to stall in the recession.

The company said earnings for the quarter ended June 28 fell to $56 million, or 28 cents per share, from $293 million, or $1.49 per share, in the same quarter last year. Excluding a charge related to recent job cuts, the engine maker said its profit was 30 cents per share.

Sales tumbled 37 percent to $2.43 billion.

Analysts polled by Thomson Reuters expected a profit of 26 cents per share on sales of $2.47 billion, on average. Such estimates typically exclude one-time items such as restructuring charges.

The company attributed its falling profits to sharply lower volumes of engines and powertrain components. Engine sales fell 45 percent to $1.31 billion, while components sales sank 41 percent to $502 million.

“The economic climate continues to be extremely challenging and we are managing our business under the assumption that we won’t see any recovery in our markets in 2009,” Cummins Chairman and CEO Tim Solso said in a statement.

The company said it would continue to make capital expenditures on its “most critical projects,” including the launch of emissions-compliant products in 2010 and products with fuel economy improvements.

The company has been cutting jobs to cope with demand. In May, Cummins announced it was cutting about 700 workers at a diesel engine plant in Indiana, though it recalled about 400 workers at the plant earlier this month.

The company had $534 million in cash and cash equivalents at the end of the quarter, up from $353 million at the end of the first quarter.

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