UPDATE 2-Cummins profit falls 81 percent, beats estimates

* Q2 net profit 28 cents a share

* Q2 profit ex-items 30 cents a share

* Sees '09 sales down more than 30 pct from '08

* Shares flat in thin premarket trade (Adds details on restructuring charge, sales declines)

CHICAGO, July 30 (Reuters) - Cummins Inc (CMI.N) said on Thursday that second-quarter earnings fell 81 percent as it grappled with a sharp drop in demand for its engines and other power-generating products.

But the company reiterated its full-year sales and profit forecast even though it expects no near-term recovery in its markets.

Net profit fell to $56 million, or 28 cents a share, from $293 million, or $1.49 a share, a year earlier. Excluding items, earnings were 30 cents a share.

Sales fell 37 percent to $2.43 billion.

The results, which were better than expected, included a $7 million charge associated with the cost of job-reductions during the quarter. Excluding the charge, the company said it would have reported earnings of 30 cents a share.

Analysts on average expected the Columbus, Indiana-based company to report a profit of 25 cents a share on sales of $2.45 billion, according to Reuters Estimates.

"The economic climate continues to be extremely challenging, and we are managing our business under the assumption that we won't see any recovery in our markets in 2009," Tim Solso, the company's chairman and chief executive, said in a statement.

Diesel engine sales fell 45 percent during the quarter, while component sales fell 41 percent and power generation sales fell 35 percent.

Its shares were flat at $39.73 in thin premarket trading. (Reporting by James Kelleher; Editing by Lisa Von Ahn and Derek Caney)