Cummins Adds to the List of Economic Bellwethers Expecting a Weak Economy….
Cummins reduced their guidance this evening as they expect the weakening global economy to hurt their earnings. Of course, Cummins isn’t the first economically sensitive company to reduce their guidance. FedEx and Norfolk Southern have already offered their thoughts on the expected global slow-down (see here). Here’s the comments from today’s press release:
Cummins Inc. (CMI) today lowered its full year revenue and EBIT guidance for 2012 and also announced actions to respond to the weakening global economy.
The Company lowered its full year revenue outlook for 2012 to approximately $17 billion compared to the Company’s previous guidance of $18 billion. Earnings Before Interest and Taxes (EBIT) are now expected to be approximately 13.5% for the year, compared to prior guidance of 14.25% to 14.75%. Based on preliminary results and subject to normal quarterly financial statement closing procedures, third quarter revenues are expected to be approximately $4.1 billion and EBIT is expected to be approximately 12.0%. The Company does not provide quarterly revenue or earnings guidance.
“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. As a result of the heightened uncertainty, end customers are delaying capital expenditures in a number of markets, lowering demand for our products,” said Tom Linebarger, Chairman and Chief Executive Officer. “We have lowered our full year revenue forecast for several markets, with the most significant changes in North America heavy duty truck and international power generation markets. Demand in China has weakened in most end markets and we have also lowered our forecast for global mining revenues. EBIT margins will also be below our previous guidance primarily due to the sharp reduction in revenues.”
Cullen Roche
Mr. Roche is the Founder of Orcam Financial Group, LLC. Orcam is a financial services firm offering research, private advisory, institutional consulting and educational services.
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7 Comments
doesnt matter. the fed is here.
Plus, the recent FTR comment on Class 8 trucks is a huge negative. The next few months could be make or break for US decoupling …
Maybe one day we will have the courage to get off this inflation targeting gerbil wheel and allow markets to clear…… find true demand levels. Deflation works as it is part of nature.
Markets clear? You’re being funny now.
With the finance sector holding multiple years of GDP, banks chartering full oil tankers to stay put in the oceans, huge inventories of raw materials waiting for better days…
No economic system takes into account the greed of people introducing artificial scarcities. Other than perhaps Izzynomics.
Wow. Just when things were seeming like they were finally starting to look up. What parts of Cummins is being cut back? Generators? Engines?
Cummins is a great company and a solid long term holding. Probably not a terrible entry point but could definitely go lower. Selling puts may not be a bad idea as these cyclicals will probably keep taking it on the chin. Second quarter outlook was a little ominous as CEO said basically that global conditions were deteriorating but they were expecting 20% + growth in North America to keep margins and revenues buoyed up. Now we are hearing that was wishful thinking when we knew last quarter that it was wishful thinking.
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