* Posts EPS of $1.90; analysts expected $2.11
* Cuts sales and EBIT forecast for full year
* Says weakness in mining and India main culprits
* Shares tumble as much as 9 percent
(Adds CEO comments, updates share price)
By James B. Kelleher
CHICAGO, Oct 29 Cummins Inc, the U.S.
maker of engines and other vehicle components, reported
lower-than-expected quarterly profit on Tuesday and cut its
full-year outlook, citing weak sales to most of the industries
its serves, including mining.
The news sent Cummins shares tumbling as much as 9.2
The Columbus, Indiana-based company said sales of all its
products had also contracted sharply in India in the most recent
quarter as a result of declining business confidence and
manufacturing activity there.
Like many emerging markets, India has seen an exodus of
foreign investment in recent months as expectations have grown
that the U.S. Federal Reserve will begin to taper its massive
"Of all of our markets, India is currently the most
challenging," Cummins CEO Tom Linebarger told analysts during a
conference call to discuss this results.
"Customers cut orders to lower working capital and preserve
cash as business confidence declined in the face of weak
industrial activity and rising inflation." Truck production
alone tumbled 33 percent in the third quarter in India,
Linebarger said, and September's production numbers were the
lowest in a decade.
Cummins now expects full-year revenue to fall 3 percent
versus its previous forecast of revenue being flat in 2013.
The company also cut its forecast for profit before interest
and taxes to a range of 12.5 to 13 percent of total sales, down
from 13 to 14 percent of sales.
Cummins, which supplies the engines that run hauler trucks,
loaders and excavators used in mines all over the world, said
lower capital equipment spending by resource companies also
caused earnings to fall short of expectations and prompted the
cut in its forecast.
Cummins was the latest U.S. company to blame the mining
sector's weakness for its financial woes, joining
heavy-equipment maker Caterpillar Inc and steelmaker
Miners, facing investor backlash over unpopular takeovers
and budget overruns and suffering from falling metal prices,
have slashed spending on new equipment and have even begun to
cannibalize components from old mining equipment in order to
avoid spending money on new spare parts.
Cummins posted third-quarter net income of $355 million, or
$1.90 a share, up from $352 million, or $1.86 a share, last
Analysts, on average, expected a profit of $2.11, according
to Thomson Reuters I/B/E/S.
Sales in the quarter fell 1 percent to $2.5 billion.
Cummins shares were down 7.1 percent at $125.27 on the New
York Stock Exchange on Tuesday afternoon, off an earlier low at
(Reporting by James B. Kelleher in Chicago and Sagarika
Jaisinghani in Bangalore; editing by Kirti Pandey, Jeffrey
Benkoe and Matthew Lewis)