Engine maker Cummins has reported its fifth consecutive year of record sales and profits, despite significant global economic challenges that negatively affected its fourth quarter performance.
In 2008, its sales increased 10 per cent to $14.34bn (£9.9bn), from $13.05bn in 2007. Net income rose eight per cent to $801m, or $4.08 per share, compared to $739m or $3.70 per share the previous year.
But the company admitted that market conditions around the world began to deteriorate sharply in the fourth quarter due to the global recession.
As such, its fourth quarter sales fell six per cent to $3.29bn compared to $3.52bn during the same period in 2007. Net income dropped to $89m or $0.45 a share, from $198m, or $1.00 a share a year ago.
Sales declines in the company’s Engine and Components divisions, driven by sharp drops in demand in the global truck and construction markets, more than offset gains in its Power Generation and Distribution wings.
Based on its latest market forecast and the expectation the global economy will not improve in 2009, Cummins expects sales in 2009 to be approximately 20 per cent lower than 2008.
Sales are forecast to drop across all business segments, with the largest decline expected to come from the Components and Engine segments. All of its business segments, however, are expected to be profitable.
In January, Cummins announced that it will reduce its worldwide professional workforce by at least an additional 800 people by 1 March and freeze pay for most salaried workers. In addition, the company’s officers had their pay reduced by 10 per cent this year.