Cummins Scales Back Light Duty Truck Production as Profit Sinks

By Joshua Jamerson 

Cummins Inc. reported fourth-quarter profit that came in below Wall Street expectations as its market conditions weakened, prompting the company to scale back production of light duty trucks in North America.

As a result, the company recorded a $211 million charge to adjust the book value of its light duty manufacturing assets to fair value.

As it reported fourth quarter results, Cummins said it expects revenues to decline between 5% and 9% in 2016. Analysts had expected earnings a 7% drop for the year.

Cummins in October said it would trim about 2,000 white-collar jobs, and had said it would evaluate whether more aggressive action were needed.

Columbus, Ind.-based Cummins has been struggling for the past several quarters with a weaker global economy--especially in China and Brazil--and a stronger U.S. dollar that makes its products more expensive overseas. Currency effects shaved 4% off its top line in the fourth quarter.

"The benefits of restructuring, material cost reduction initiatives and quality improvements combined with the launch of new and improved products in 2016, should position the company for stronger performance in the future, despite the challenges of a weak macroeconomic environment," Chief Executive and Chairman Tom Linebarger said.

For the fourth quarter, Cummins reported a profit of $161 million, or 92 cents a share, down from $444 million, or $2.44 a share, a year earlier. Excluding one-time items, per-share earnings fell to $2.02 from $2.56 a year ago.

Revenue declined 6% to $4.77 billion. Analysts expected $2.11 in per-share earnings and $4.68 billion in revenue.

Shares were inactive in premarket trading.

Write to Joshua Jamerson at [e-mail]

(END) Dow Jones Newswires

February 04, 2016 08:39 ET (13:39 GMT)

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