Cummins lowers 2011 revenue view, shares fall
(Reuters) - U.S. diesel engine maker Cummins Inc (CMI.N) lowered its revenue and profit margin forecasts for 2011, blaming an uncertain global economy, and its shares fell 7 percent in premarket trading.
The company posted profit that topped Wall Street's forecasts only because of a lower than expected tax rate, analysts said.
Cummins said it now forecasts full-year sales of $17.5 billion to $18 billion; previously it had forecast $18 billion
and analysts, on average, look for $18.08 billion, according to Thomson Reuters I/B/E/S.
The Columbus, Indiana-based company also said it now expects profit before interest and taxes to come to 14 to 14.5 percent of sales, compared to its earlier 14.5 percent view.
"There is some uncertainty around the macro-economic environment. Government actions to reduce inflation in India and China have resulted in softer near-term demand than we previously expected," said Tom Linebarger, the company's chief operating officer. "This, along with the recent strengthening of the U.S. dollar, has caused us to slightly soften full year revenue guidance."
The lowered full-year revenue forecast implies a weaker fourth quarter, said Eli Lustgarten, analyst at Longbow Research.
"Third-quarter revenue was in line, so you have a weaker fourth quarter number coming," Lustgarten said.
Its shares fell 7 percent to $91.73 in premarket trading.
The company reported a profit of $452 million, or $2.35 per share, on Tuesday, compared with $283 million, or $1.44 per share, a year earlier.
Revenue rose 36 percent to $4.63 billion from $3.4 billion.
Analysts, on average, expected profit of $2.25 per share, on $4.61 billion in revenue, according to Thomson Reuters I/B/E/S.
(Reporting by Scott Malone in Boston; Editing by Lisa Von Ahn, Dave Zimmerman)
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