Cummins Inc. last week revised its outlook for 2008 based on the continuing decline in many of its key markets around the world. The company now expects 2008 sales to increase by 9 percent over 2007, compared to its previous guidance of a 12-percent increase. Earnings Before Interest and Taxes is forecast to be slightly more than 9 percent of sales, compared to the company’s earlier guidance of 10 percent.
“Like many other companies, Cummins is experiencing the negative impact of the global economic downturn,” said Tim Solso, Cummins chairman and CEO. “Our Engine and Components segments are seeing the most significant declines with revenues for the fourth quarter down 15 percent compared to what we anticipated in our previous guidance at the end of October."
“We are taking aggressive steps to manage costs and production levels to reflect current economic conditions,” Solso added. “We do not expect market conditions to improve significantly in the immediate future.”
The company’s heavy-duty and medium-duty truck and construction markets were hardest hit in recent weeks, with drops in demand in North America and Europe. In addition, truck markets in China, Brazil and India also have weakened.
As a result of the rapid decline in sales, the Engine and Component segments are expected to report sharply lower EBIT margins in the fourth quarter, compared to the same period a year ago.
Cummins Inc., a global power leader, is a corporation of complementary business units that design, manufacture, distribute and service engines and related technologies, including fuel systems, controls, air handling, filtration, emission solutions and electrical power generation systems. Headquartered in Columbus, Ind., Cummins serves customers in approximately 190 countries and territories through a network of more than 500 company-owned and independent distributor locations and approximately 5,200 dealer locations. Cummins reported net income of $739 million on sales of $13.1 billion in 2007.