“Global off-highway and power-generation markets have been weak for a few time and are worsening”, Linebarger said, and “Industry orders in key end markets in Brazil and China are at multi-year lows and showing no signs of improvement in the near-term”.
Advertisement
“We are disappointed with our results in the third quarter, but we are responding quickly to softening demand”, said Rich Freeland, President and Chief Operating Officer.
Cummins said revenue for the quarter was down nearly 6 percent at $4.62 billion from $4.89 billion a year earlier. According to a news release, adjustments are already being made on a facility-by-facility basis and the company will decide if more significant restructuring will be required in the near future.
“We really think the financial challenges, the market challenges that we’re going to face are going to persist for a while”, Linebarger told The Associated Press.
The job reductions amount to about 4 percent of the Columbus, Indiana-based company’s almost 55,000 workers around the world.
UIndy’s Dr. Matt Will says the global economic slowdown and low demand for Cummins’ low emission engines are among them. North American sales rose 4%, which was much slower than the 12% year-over-year growth that Cummins managed in the second quarter.
According to Jon Mills, a Cummins spokesman, the reductions will affect professional jobs, not manufacturing positions.
Cummins also posted disappointing profit and revenue for the third quarter. Within worldwide markets, lower revenues in Brazil, Europe and China were partially offset by growth in India. “Where the bottom is, we’re not exactly sure, but it doesn’t look like we’ve reached it”. It previously expected revenue to grow 2 percent to 4 percent. Currency negatively impacted sales by four percent compared to previous year, primarily due to a stronger US dollar. Analysts had expected revenue for the quarter of $4.91 billion. This summer Cummins hiked its quarterly dividend by 25% to 97.5 cents a share. The company also scaled back its 2015 profit margin guidance before interest and taxes to 12.75% to 13%, implying earnings per share of about $8.95 at the middle of the range.
Advertisement
Despite the upbeat picture that executives tried to paint in its restructuring announcement, Cummins investors weren’t pleased with the results, sending the stock falling by 10% in the first hour of pre-market trading following the announcement and setting the tone for a poor day for the stock.
