Profits and revenues for engine maker Cummins took a big hit in the first quarter as the global economic recession reduced demand across the board for all manner of engines, but especially for those in trucks.
Cummins said its first-quarter sales dropped 30% to $2.44 billion compared to the same period last year, with earnings falling a whopping 96% to $7 million. The company noted that its first -quarter results included a $66 million charge to cover the costs associated with labor force cuts of more than 4,100 employees and contract workers during the quarter in response to lower demand for its products.
All four of Cummins business segments experienced sales decreases compared to the first quarter of 2008, with the largest declines coming from its engine and components group.
Compared to the same period last year, worldwide heavy-duty truck engine shipments were down 30%; light-duty diesel engine shipments to Chrysler fell 45%; global medium-duty truck engine shipments dropped 42%; and construction industry shipments were off by 69%.
"The first quarter was, as we expected, extremely challenging and we do not see the economy or our markets improving for the remainder of 2009," said Tim Solso, Cummins chairman & CEO. "The global recession … has affected virtually every market in which we operate around the world."
Based on these results, Cummins has revised its sales and earnings guidance downward for 2009, expecting sales to be about 30% lower than 2008 and anticipates earnings (before interest and taxes) to reach roughly 5% of sales, excluding the first quarter restructuring charge.
