Shares rose even though Cummins today reported dramatically lower revenue and profit in the second quarter compared to the same period a year ago. Shares climbed $2.54 late this morning, to $42.27 each.
Quarterly revenue at the Columbus-based engine maker fell 37 percent, from $3.9 billion a year ago to $2.4 billion this year.
Profit was $56 million, or 28 cents a share, down from $293 million, or $1.49 a share, a year ago.
Cummins said second-quarter earnings included a $7 million charge for cost-reduction actions. Excluding the charge, Cummins had a profit of $60 million, or 30 cents per share, exceeding the estimates of 25 cents per share by 13 analysts surveyed by Bloomberg News.
The company's second-quarter sales almost matched the first quarter's, but profit was eight times greater. Cummins attributed the increase to "ongoing efforts to reduce costs and align manufacturing capacity to the lower demand."
Cummins cut about 7,800 jobs from October 2008 through May, according to Bloomberg. The company had 39,800 workers at the beginning of the year.
The company experienced lower demand in every business segment in the second quarter compared to a year ago. Sales in the engine segment fell 45 percent, to $1.31 billion. They were down 36 percent in the power generation segment, to $610 million; 41 percent lower in components, to $502 million; down 20 percent in distribution, to $463 million; and 17 percent lower in joint ventures, to $57 million.
"The economic climate continues to be extremely challenging, and we are managing our business under the assumption that we won't see any recovery in our markets in 2009," said Cummins Chairman and CEO Tim Solso in a prepared statement. "Still, our aggressive efforts to reduce costs and align manufacturing capacity with demand have allowed us to perform well under the circumstances and to position ourselves to emerge from the downturn an even stronger company."
Cummins said it still expects overall sales for 2009 to be about 30-percent lower than 2008 and anticipates earnings before interest and taxes of 5 percent of sales, excluding restructuring charges.