The IBJ
Cummins Inc. this morning reported its fifth consecutive year of record sales and profits, then promptly lowered its expectations for 2009.
The Columbus engine maker expects sales this year to be about 20 percent lower than the $14.3 billion recorded in 2008; it said earnings before interest and income tax expenses should amount to about 6.5 percent of that total - down from 9 percent last year.
For 2008, Cummins' profit climbed 8 percent to $801 million despite a brutal fourth quarter and $37 million in pre-tax charges for costs associated with job cuts that began at the end of the year.
By the end of March, the company expects to have reduced its global work force by more than 1,400 salaried professionals and over 1,300 hourly manufacturing plant employees - or about 6 percent of its total workforce-since the beginning of the fourth quarter 2008.
The most recent cuts were announced yesterday, when Cummins said it was offering retirement packages to 700 eligible hourly workers in hopes of eliminating 350 more jobs.
Market conditions began to deteriorate rapidly in the fourth quarter, the company said. Fourth-quarter sales fell 6 percent to $3.3 billion, and profit dropped to $89 million from $198 million in the prior-year period.
"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," CEO Tim Solso said in a statement. "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."
Sales are forecast to drop across all business segments, but the company still expects to be profitable in 2009.
Last month, Cummins said it would freeze pay for most salaried workers and reduce officers' pay by 10 percent this year; it plans to reduce the number of corporate officers by 10 percent by the end of next month.
The company also cut 2,500 temporary and contract workers, instituted a hiring freeze, shortened work weeks at a number of manufacturing facilities and cut discretionary spending.