Cummins Inc. recently announced its first-quarter 2009 financial report that the company’s net profit for the first quarter was US$7 million, a decrease of 96% from last year.
In terms of company performance, Cummins achieved sales of US$2.44 billion in the first quarter, a decrease of 30% from the same period in 2008. The pre-tax income was $28 million, and the yield was 1.1% of sales, which was 91% lower than the first quarter of 2008.
On the financial side, Cummins said that although the economic situation is extremely challenging, Cummins does not currently need to use a $1.1 billion revolving credit facility. As of the end of the first quarter, Cummins had $353 million in cash and cash equivalents, with a total liquidity of $1.8 billion.
In addition, Cummins has also lowered its 2009 performance expectations in light of the current sluggish market environment. Cummins Corporation expects sales in 2009 to be 30% lower than in 2008, with a pre-tax EBIT of 5% (excluding agency adjustments).
Due to the decline in business volume caused by the global economic recession, Cummins laid down 4,100 formal employees and contractors in the quarter. Tim Solso, Cummins Chairman and Chief Executive Officer, said: “The situation in the first quarter was very serious, and there is no sign that the economy will pick up in 2009. Currently the company is taking actions to significantly reduce costs and increase efficiency to help companies. Maintaining a reasonable level of profitability in 2009 will also ensure that the company has sufficient cash flow to continue to invest in key product and technology development and prepare for future development.
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