Cummins Again Lowers Guidance; Set for Cuts
Cummins Inc. again lowered its guidance for the year and unveiled plans to cut up to 1,500 employees as the engine maker looks to cut costs in response to the weakening global economy.
MarketWatch reported that shares sank 5.6% to $86 after hours as the company also said third-quarter revenue is expected to miss Wall Street’s expectations. Through the close, the stock is off 4.8% over the past three months.
Cummins reduced its full-year revenue estimate by $1 billion, now projecting sales of $17 billion. It last cut its revenue projections in July. The company expects earnings before interest and taxes to be approximately 13.5% of sales for the year, compared to its prior view of 14.25% to 14.75%.
Cummins expects revenue of about $4.1 billion in the third quarter, below the $4.42 billion projected by analysts polled by Thomson Reuters.
Chairman and CEO Tom Linebarger said the company continued to see weak economic data in several regions increase uncertainty about the direction of the global economy.
“As a result of the heightened uncertainty, end customers are delaying capital expenditures in a number of markets, lowering demand for our products,” Linebarger said.
The company saw the most significant changes in North American heavy duty truck and international power generation markets, while demand in China weakened in most end markets. Cummins also lowered its forecast for global mining revenue.
Cummins unveiled several cost-cutting actions, including planned work week reductions, shutdowns at some manufacturing facilities and plans to reduce its workforce by 1,000 to 1,500 people by the end of the year.
In July, Cummins reported its second-quarter earnings fell 7.1% as revenue was hurt by currency fluctuations, though growth in North America offset weakness in international markets — especially China and Brazil.
It is scheduled to release its third-quarter results on Oct. 30.