Cummins lowered its outlook for the year after reporting lower-than-expected third-quarter revenue, citing weakness in the mining industry.
Sales in the power generation segment were down 13 percent, to $712 million, for the quarter that ended Sept. 29. Earnings before interest and taxes were $45 million — or 6.3 percent of sales — down from $73 million, or 9 percent of sales, in 2012. The company said weak demand in most international markets, particularly Europe and India, offset stronger revenue in North America.
Engine sales were down 1 percent, at $2.5 billion, because of lower demand in global mining, stationary power and the light-duty on-highway market in the United States.
The company posted net income of $355 million, or $1.90 a share, up from $352 million, or $1.86 a share, last year.
Based on the current forecast, the company expects full-year revenue to be down 3 percent from 2012, compared with its previous expectation that revenue would be flat in comparison to last year.
“The company increased gross margins in the third quarter, primarily due to the benefits of our cost-reduction initiatives,” Cummins chairman and CEO Tom Linebarger said in a statement.
“Material cost savings, productivity gains and lower warranty expenses all contributed to the improvement. Revenues were below our expectations as we continue to face an environment of weak demand for capital goods in most of our major markets. Our focus on lowering costs in all parts of our business positions us well to deliver strong earnings growth as market conditions improve."