Cummins prepare for 20% sales dip in ‘09

Cummins suffered a 10% drop in engine sales and a 13% fall in components sales for the December quarter, but sales in its power generation and distribution segments were up. But the manufacturer said declines in its engine and components segments, driven by sharp demand drops in the global truck and construction markets, more than offset gains in power generation and distribution. Overall, fourth-quarter sales fell 6% to $US3.29 billion compared to $US3.52 billion during the same period in 2007, with net income dropping to $US89 million, down from $US198 million a year ago. Engine sales during the quarter were down to $US1.94 billion ($A5.06 billion) from $2.16 billion in Q4 2007, while component sales fell from $US777 million in Q4 2007 to $US676 in Q4 2008. Cummins’ power-generation business segment was up 6% to $US887 million and the distribution segment was up 19% to $US557 million. “Given our record-setting performance during the first nine months of the year, the rapid drop in demand in the fourth quarter as a result of the global recession was a major disappointment,” said Cummins chairman Tim Solso. “At the same time, we moved quickly to lower our costs and tightly manage our capital spending, and already have taken further action in early 2009.” By the end of March 2009, the company is planning to have reduced its global workforce by more than 1,400 salaried professionals and more than 1,300 hourly manufacturing-plant employees, or about 6% of its total workforce. In January, Cummins announced it would reduce its worldwide professional workforce by at least an additional 800 people by March 1 and freeze pay for most salaried workers. In addition, the company’s officers had their pay reduced by 10% for 2009.

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