USA: Cummins warns on earnings outlook
In presenting its downbeat third quarter results, Cummins noted that the continuing deterioration across its markets makes a fourth quarter improvement unlikely.
Instead, the company now expects fourth quarter results to be level with its second and third quarter performance.
Said Chairman and Chief Executive Officer, Tim Solso, "We expect reduced revenues from some of our more profitable businesses like the Dodge Ram pickup truck and some segments of the Power Generation business. However, our cost reduction efforts will permit us to remain profitable despite further weakening of our markets. I believe we are well positioned to improve our earnings when our end markets begin to improve."
Total sales for the Engine Business in the third quarter were $767 million, compared to $962 million a year ago - a drop of 20 percent. Earnings before interest and taxes were a loss of $18 million versus a profit of $6 million in the third quarter last year, due primarily to volume decreases and the resulting under-absorption of overhead costs.
Worldwide heavy-duty truck sales of $222 million were down 27 percent compared to the third quarter of 2000, with a 45 percent decrease in unit shipments to the North American heavy-duty truck market. Unit shipments to international markets were down 31 percent, primarily due to a reduction in shipments to OEMs in Mexico. In the medium-duty truck and bus market, sales of $135 million were 23 percent lower than a year ago, with a 35 percent drop in North American shipments. International shipments were down 20 percent due to lower demand in China and Latin America.
Sales to light-duty automotive and recreational vehicle markets were $165 million, down 22 percent from the year-ago level, due to a decrease in shipments to DaimlerChrysler of 29 percent from the third quarter of last year. Sales to agricultural, construction, mining, marine and other industrial equipment markets were down 9 percent.
"I'm pleased that we met our objectives for the quarter and remained profitable despite the worst market deterioration I've experienced, in virtually every one of our North American end markets," added Solso. "Our Engine Business continues to be particularly hard hit with revenues down 20 percent from the third quarter of 2000. However, we continue to realize the benefits from our aggressive cost reduction efforts across all of our businesses, including the benefits of our restructuring actions and Six Sigma programs."