Cummins plans to reduce its workforce as part of a wide-ranging cost-cutting plan. It has also lowered its full-year revenue and EBIT guidance for 2012.
By the end of this year, Cummins expects to reduce its workforce by between 1,000 and 1,500 people. It will also start planned work week reductions and shutdowns at some manufacturing facilities.
“Responding quickly and strategically during these challenging economic times will pave the way for Cummins to emerge stronger as a company when markets inevitably rebound. Taking these actions now will allow us meet customer needs, maintain strong financial performance and allow us to capitalise on future growth opportunities,” explained company Chairman and Chief Executive Officer, Tom Linebarger.
Cummins has also cut its forecast for revenues in 2012 down to around US$17bn. It had earlier predicted revenues of around US$18bn. Earnings Before Interest and Taxes (EBIT) are now expected to be around 13.5% this year, compared with the earlier forecast of 14.25% to 14.75%.
“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,” Linebarger said.
This updated EBIT guidance does not include the benefits, or costs, of Cummins’ cost cutting measures. Based on preliminary results, the supplier expects its revenues for the third quarter to be around US$4.1bn. For this period, Cummins expects EBIT to be approximately 12%.
“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.”
