Cummins 2Q Profits Off 12% on Weaker Margins
Cummins Inc.’s second-quarter earnings fell 12% as the supplier of engines for heavy-duty trucks reported weaker margins, offsetting a slight increase in sales.
MarketWatch reported that the Columbus, Ind.-based engine maker unveiled cost-cutting measures several months ago, pointing to a weakening global economy that it said was driving down demand for its engines. The company described a particularly sharp contraction in the North American commercial truck market — where Cummins is the largest supplier of engines for heavy-duty trucks — saying trucking companies have been throttling back on their purchases because of uncertainty about freight volumes and the strength of the U.S. economy.
Cummins reported a profit of $414 million, or $2.20 a share, down from $469 million, or $2.47 a share, a year earlier. Excluding items, earnings per share were $2.45.
Net sales edged up 1.6% to $4.53 billion. Sales rose 7% in North America and declined 4% in its international markets, due to weaker demand in Europe, India, and Mexico. Gross margin narrowed to 25.5% from 27.2%.
In the engine segment — the largest contributor to the top line — sales dropped 7% to $2.7 billion.