Cummins Inc.'s profit for its fiscal third quarter fell 59 percent and sales dropped by 31 percent compared to the same period last year, but the company said its profitability and cash position improved from the second quarter.
The Columbus, Ind.-based engine maker Friday morning reported a profit of $95 million, or 48 cents per share, on sales of $2.53 billion, for the quarter ended Sept. 27. The earnings beat consensus analyst expectations of 37 cents per share, but sales fell just short of the analyst target of $2.48 billion.
During the same period last year, Cummins reported profit of $229 million, or $1.17 per share, on sales of $3.7 billion.
The company's moves to cut costs and inventory and juggle manufacturing capacity helped it stockpile cash. The company had $686 million in cash on hand, compared to $534 million at the end of the second quarter and $426 million at the end of 2008.
The moves also resulted in profitability for each of Cummins' four segments, despite sales drops of at least 25 percent each. The worst performers were engines, down 37 percent, and power generation, down 38 percent.
Sales compared to the second quarter increased 4 percent thanks to improving demand in China, India and Brazil and what the company described as a "short-term increase" in highway engine and components sales in the U.S.
“Given the continued weakness in many of our markets, the company performed extremely well in the third quarter,” Cummins Chairman and CEO Tim Solso said in a statement. “The decisive actions we have taken over the past several months have allowed us to remain profitable, generate cash and invest in the company’s future in the face of the worst recession in decades.”
Cummins raised its sales and profit guidance for the year, and now expects sales in 2009 to be down slightly less than 30 percent from 2008. It previously had expected the drop to come in slightly above 30 percent.