Cummins Inc.’s third-quarter earnings fell 22% as the Columbus, Ind.-based engine maker reported that revenue declines in its international markets offset modest growth in North America.
Earlier this month, Cummins trimmed its sales and profit guidance and unveiled cost-cutting measures as it said a weakening global economy was driving down demand for the company’s engines. The company, which is a major supplier to the motorhome sector, said the slowdown is particularly acute in the North America commercial truck market where Cummins is the largest supplier of engines for heavy-duty trucks.
Cummins also reported deteriorating market conditions in China, the global mining industry and the international market for power-generating engines.
“Demand has dropped sharply over the last three months, reflecting a high degree of uncertainty among customers in most geographic markets,” Chairman and CEO Tom Linebarger said Wednesday (Oct. 31). “We have been responding to the conditions by delaying or canceling projects, flexing production at some of our manufacturing plants, reducing discretionary expenses, and reducing our workforce by 1,000 to 1,500 people by the end of this year.”
Cummins reported a profit of $352 million, or $1.86 a share, down from $452 million, or $2.35 a share, a year earlier. Excluding items such as tax adjustments, earnings were down at $1.78 from $2.20. Analysts recently projected $1.83.
Revenue decreased 11% to $4.1 billion, in line with the company’s recent downbeat forecast. Sales rose 2% in North America, but declined 21% in its international markets.
Gross margin eased to 25.3% from 25.7%.
In the engine segment — the largest contributor to the top line — sales dropped 14% to $2.5 billion.