Diesel engine maker Cummins, Inc. (CMI) reported Tuesday a profit for the first quarter that plunged from last year, reflecting double-digit revenue decline amid weaker demand across most major geographies and end markets.
Adjusted earnings per share significantly missed analysts' expectations, while quarterly sales declined 12 percent and trailed their estimates. The company also maintained its sales forecast for the full-year 2013.
"As anticipated, we experienced weak demand in the first quarter in many of our major markets. While uncertainty remains in a number of markets, we expect that the first quarter will mark the low point of the year for Company revenues," Chairman and CEO Tom Linebarger said in a statement.
The Columbus, Indiana-based company reported net income of $282 million or $1.49 per share for the first quarter, lower than $455 million or $2.38 per share in the prior-year quarter. Excluding special items, adjusted net income for the quarter was $271 million or $1.44 per share.
On average, 18 analysts polled by Thomson Reuters expected the company to earn $1.86 per share for the first quarter. Analysts' estimates typically exclude special items.
Net sales for the quarter declined 12 percent to $3.92 billion from $4.47 billion in the same quarter last year, and missed fifteen Wall Street analysts' consensus estimate of $3.97 billion.
Revenues in North America declined 15 percent and international revenues decreased 10 percent as the company experienced weaker demand across most major geographies and end markets.
The company noted that the most significant decline in demand occurred within the its engine business, with total unit volumes declining 18 percent year-over-year. Shipments of high horsepower engines also decreased 24 percent, due to weakness in mining, oil and gas and power generation markets.
Sales for the engine segment decreased 19 percent from a year ago to $2.3 billion, and distribution sales dropped 11 percent to $778 million from last year. Components sales declined 7 percent to $1.0 billion, and power generation segment sales were down 4 percent to $746 million from last year.
Looking ahead to fiscal 2013, Cummins continues to expect revenues to be between flat to down 5 percent from fiscal 2012 sales of $17.33 billion, implying sales between $16.46 billion and $17.33 billion. Street is currently looking for full-year 2013 revenues of $17.16 billion.
"We expect moderately improving order trends in on-highway and construction markets in North America to be the most significant drivers of improvement in revenues going forward. We continue to make investments in our distribution system and in new products as we remain focused on future profitable growth," Linebarger added.
In Tuesday's regular trading session, CMI is currently trading at $107.94, down $6.31 or 5.55% on a volume of 1.91 million shares.
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