Cummins Slides on Job Cuts Plan, Pared Forecasts
Cummins Inc. (CMI), a maker of heavy-truck engines, and Accuride Corp. (ACW), a truck-parts manufacturer, fell as the companies backed off 2012 financial forecasts amid slowing demand for the vehicles.
Shares of Cummins slid 3.4 percent to $87.79 at the close in New York, for the biggest daily decline since July 11. Accuride dropped 30 percent to $3.17, the most since March 2010 when trading began after the company exited bankruptcy.
Orders for Class 8 trucks, the largest models, fell 35 percent in North America last month to 15,205, according to FTR Associates. Cummins yesterday trimmed its profit and sales outlooks and said it expects to eliminate as many as 1,500 jobs by year-end. Accuride said today it will miss its annual projections and has cut its salaried workforce by 14 percent.
Cummins’s revised forecasts were “worse than feared,” said Kristine Kubacki, a St. Louis-based analyst at Avondale Partners LLC with a market perform rating on the shares. “My sense is the Street thought there would be a guide down, but this is sizable.”
Cummins said it now expects full-year revenue of about $17 billion, down from its earlier outlook of $18 billion, and earnings before interest and taxes of about 13.5 percent, reduced from a range of 14.25 percent to 14.75 percent. The profit forecast doesn’t include the cost or benefits of the job cuts.
Cummins, based in Columbus, Indiana, also produces power- generation equipment.
“We continued to see weak economic data in a number of regions during the third quarter, increasing the level of uncertainty regarding the direction of the global economy,” Chief Executive Officer Tom Linebarger said in a statement. “As a result of the heightened uncertainty, end customers are delaying capital expenditures in a number of markets, lowering demand for our products.”
Cummins cited the “North America heavy-duty truck and international power-generation markets” in trimming its sales projection.
Accuride, based in Evansville, Indiana, didn’t give specific figures in saying it wouldn’t meet its 2012 forecast. The company had projected an annual loss of 5 cents to 12 cents a share, according to slides in a July 27 regulatory filing.
“Softening industry conditions and key customer developments are creating a challenging near-term environment,” the company said in a statement today. “Class 8 truck orders continue to be weak and have led to rapidly declining build schedules” at major customers.
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