UPDATE 2-Cummins reports, ups forecast; shares rise
(Adds stock action, detail on flood charge, analyst comment, byline.)
By James B. Kelleher
CHICAGO, July 30 (Reuters) - Cummins Inc (CMI.N), a U.S. maker of engines and power generators, said its earnings in the second quarter rose a better-than-expected 37 percent as strong international sales overshadowed weakness in some key North American markets.
The company, which took a charge related to damage from this summer's Midwest flooding, raised its full-year sales forecast, helping send its shares up more than 7 percent in premarket electronic trading.
Cummins reported a second-quarter net profit of $293 million, or $1.49 a share, up from $214 million, or $1.06 a share, in the same period in 2007.
Analysts' average profit forecast was $1.23 a share, according to Reuters Estimates.
Sales at the Columbus, Indiana-based company rose 16 percent to $3.89 billion, ahead of an average forecast of $3.86 billion.
The results included a $6 million charge related to damage to several facilities caused by this summer's flooding in the Midwest. Ann Duignan, an analyst at JP Morgan, estimated that cost the company 2 cents a share.
"Without this, EPS would have come in at $1.51," Duignan said.
Some of the sales growth came from strong sales of its commercial generators to customers in the developing world, including the Middle East, Latin America and China.
It also reported strong sales of its turbochargers in North America, Europe and China.
Cummins said sales outside the United States accounted for 61 percent of its business during the quarter, up from 54 percent in all of 2007 and 57 percent in the 2008 first quarter.
Sales of its more consumer-related products in the United States tumbled during the quarter as falling home prices, tight credit markets and rising energy costs soured consumer confidence and kept buyers out of truck and motorhome showrooms.
Cummins said sales of diesel engines to Chrysler for the Dodge Ram heavy-duty pickup fell more than 60 percent, and RV engine sales fell nearly 40 percent.
Looking forward, the company expects full-year sales to grow 15 percent, up from a previous forecast of 12 percent.
Cummins shares were last trading at $71.02 in pre-market trading after closing Tuesday at $66.02 on the New York Stock Exchange. (Reporting by James Kelleher)
