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Cummins' earnings, revenue fall on weaker demand

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Engine maker Cummins Inc. saw profit sink 30 percent in the fourth quarter as demand for its products fell in both domestic and international markets.

Columbus-based Cummins said Wednesday that fourth-quarter profit was $381 million, or $2.02 per share, compared with $548 million, or $2.86 per share, a year earlier.

Revenue fell 12.8 percent, to $4.29 billion.

Despite the decline, adjusted earnings and revenue outperformed analyst estimates.

Cummins also warned that sales could fall as much as 5 percent in 2013 because of  falling demand for its heavy truck engines.

"After a strong start to the year, demand declined across most geographies and end markets in the second half of 2012 as the global economy slowed," CEO Tom Linebarger said in a prepared statement. "The work we have undertaken to reduce costs and lower inventory should benefit the company when the global economy improves, however, there is uncertainty surrounding the timing and pace of improvement in end markets in 2013."

The company said it trimmed its work force by about 650 employees, or 3 percent, in 2012 while also eliminating about 650 hourly positions.

The company blamed the quarterly revenue decline on weaker demand in truck, construction, and oil and gas markets in North America, as well as lower demand in international markets for power-generation equipment and construction, truck and mining engines.

Full-year revenue was $17.3 billion, down 4 percent from 2011. Revenue in North America rose 9 percent, but was offset by international sales that fell 15 percent, with the most significant declines in Brazil, China and Europe.

Full-year earnings were $1.66 billion, or $8.74 per share, down from $1.85 billion, or $9.55 per share, in 2011.

Cummins shares rose $2.51, or 2.1 percent, Wednesday morning, to $119.90 each.



 

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