This is exactly what you don’t want to see. A major industrial company announcing a slowdown due to China and layoffs in the US.
The company is Cummins Engine. The stock is off over 6% after hours, and the company is laying off up to 1500.
We’ll note that this story of declining global growth hitting domestic US manufacturers is a big one that we’ve been talking about for a while.
This explains why in recent months — despite the secular upturn in manufacturing — the industry has actually shed jobs.
As you can see, the industry has lost jobs in both September and August.
The full announcement is below.
Cummins Inc. (NYSE: CMI) today lowered its full year revenue and EBIT guidance for 2012 and also announced actions to respond to the weakening global economy.”Taking these actions now will allow us meet customer needs, maintain strong financial performance and allow us to capitalise on future growth opportunities.”
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.”
The Company announced that it is taking actions necessary to respond strategically to the current environment by cutting costs while maintaining investments in key growth programs. Actions include a number of measures to reduce cost including planned work week reductions, shutdowns at some manufacturing facilities, and some targeted workforce reductions. The Company expects to reduce its workforce by between 1000 and 1500 people by the end of the year. The updated EBIT guidance does not include the benefits or costs of these actions.
“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,” continued Linebarger. “Taking these actions now will allow us meet customer needs, maintain strong financial performance and allow us to capitalise on future growth opportunities.”
Details of third quarter results and the updated full year outlook will be covered during the previously scheduled third quarter earnings conference at 10 a.m. EDT on October 30, 2012. The Company will not be making any further statements about either the third quarter or the full year until the third quarter earnings conference.
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