Cummins Maintains Profits amid Weak Demand
2009-08-11 Source：english.chinabuses.com
English.chinabuses.com: recently, the internationally famed engine maker Cummins Inc. posted a profit of $56 million in the 2nd Q of its fiscal year despite weakening demand from the global recession.
In fact, this Indiana-based auto components manufacturer increased profit from $7 million in the first quarter, driven by cost reduction initiatives and alignment of manufacturing capacity to the reduced demand. However, its profit was significantly lower than $293 million reported a year ago, which was chiefly attributed to lower volumes, especially due to a steep decline in demand in the engine and the components segments.
Despite the worsening market conditions, Cummins has managed to generate significant positive cash flow ($181 million) during the quarter. Sales for the quarter were 37% lower at $2.43 billion. Sales plummeted 45% to $1.31 billion in the engine segment, primarily due to sales declines in light-duty/RV (54%) and industrial (45%) vehicles. Sales slumped 41% in the components segment to $502 million due to significant volume declines from OEM customers in North America and Europe. Sales in the power generation segment fell 35% to $610 million due to poor performances in the commercial and consumer products markets. Distribution sales slashed 20% to $463 million as a result of unfavorable foreign currency exchange rate movements.
Cummins formed joint ventures (JVs) and partnerships with large automakers in emerging markets, including Tata in India, Dongfeng and Foton in China, and Kamaz in Russia. Income from JVs dipped 17% to $57 million due to significant declines in demand. For 2009, Cummins continues to expect sales 30% lower than the previous year.
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