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Cummins 2Q Profits Off 12% on Weaker Margins

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July 30, 2013 by   Leave a Comment

Cummins Inc.’s┬ásecond-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.

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