October 27, 2015 / 12:31 PM / in 4 years

UPDATE 2-Cummins to cut jobs as weak global economy hurts sales

(Adds sales outlook, details of results, updates stock price)

By Nick Carey

CHICAGO, Oct 27 (Reuters) - Diesel engine maker Cummins Inc on Tuesday posted a lower-than-expected quarterly profit and said it would lay off up to 2,000 people as global economic weakness continued to weigh on its international sales.

Shares of the company fell more than 8 percent. It said most of the job cuts, which would affect nearly 4 percent of its workforce of about 54,000, would take place by the end of 2015 and deliver annualized savings of $160 million to $200 million.

During a conference call with analysts, executives said the company expected full-year sales to be flat to down 2 percent, compared with its previous forecast of a rise of 2 percent to 4 percent.

Chief Executive Officer Tom Linebarger said in a statement that industry orders in Brazil and China were at multiyear lows, with no sign that these markets will rebound soon.

“Given the uncertainty in the global economy, we expect challenging conditions to persist for some time,” Linebarger said.

The company said that in the coming weeks and months it would decide whether further restructuring will be necessary.

The Columbus, Indiana-based company reported a third-quarter net profit of $380 million, or $2.14 per share, down more than 10 percent from $423 million, or $2.32 per share, a year earlier.

Analysts on average had expected $2.60 per share, according to Thomson Reuters I/B/E/S.

Revenue fell almost 6 percent to $4.62 billion from $4.89 billion. Analysts had expected $4.91 billion.

The company said North American sales were up 4 percent, but international sales plunged 18 percent.

Sales of engines for heavy-duty trucks in North America, however, were down 9 percent, and Cummins lowered its forecast for the size of that overall market in 2015 by 4,000 units to 286,000. The heavy-duty truck business had previously remained resilient even while international sales had faltered.

In morning trading, Cummins shares were down 8.4 percent at $102.70.

Shares of Navistar International Corp, which buys heavy-duty truck engines from Cummins, were down nearly 13 percent at $12.24. (Reporting by Nick Carey; Editing by Chizu Nomiyama and Lisa Von Ahn)

0 : 0
  • narrow-browser-and-phone
  • medium-browser-and-portrait-tablet
  • landscape-tablet
  • medium-wide-browser
  • wide-browser-and-larger
  • medium-browser-and-landscape-tablet
  • medium-wide-browser-and-larger
  • above-phone
  • portrait-tablet-and-above
  • above-portrait-tablet
  • landscape-tablet-and-above
  • landscape-tablet-and-medium-wide-browser
  • portrait-tablet-and-below
  • landscape-tablet-and-below