Cummins Profit Down 55% on Weak Demand

Columbus, Ind. -- Engine maker Cummins (CMI Quote) said Tuesday its fourth-quarter profit fell 55% as demand fell sharply in the global truck and construction markets.

Cummins said its earnings dropped to $89 million, or 45 cents per share, in the quarter ended Dec. 31 from $198 million, or $1 per share, in the same quarter last year.

Sales declined more than 6% to $3.29 billion from $3.52 billion a year ago.

Wall Street expected 42 cents per share on sales of $3.2 billion in sales, according to a poll of analysts by Thomson Reuters.

The company posted a 10% decline in sales in its engine segment, its largest unit, due to reduced demand in its truck and construction markets. Its components segment also showed a decline in revenue, though sales at its power generation and distribution segments climbed.

Cummins has been slashing its work force to cope with its declining markets. On Monday, the company announced it would offer voluntary retirement packages to up to 350 workers. By the end of March, Cummins said it will have reduced its global work force by more than 2,700 salaried and hourly employees.

The company also said it has suspended its stock buyback program, but said it "remains committed" to its quarterly dividend.

For the full year, Cummins said earnings rose 8% to $801 million, or $4.08 per share, from $739 million, or $3.70 per share, in 2007. Sales rose to $14.34 billion from $13.05 billion.

Shares of Cummins fell 30 cents to $24 in premarket trading on Tuesday. The stock has fallen 9% since the start of the year, and has lost more than two-thirds its value since hitting a 52-week high of $75.98 last July.