Cummins Inc. said second-quarter earnings fell 97%, which is less than analysts had predicted, due to the weakened North American heavy truck market. Recent overproduction by truck makers has created a glut of used vehicles, which resulted in a need for fewer engines, Cummins said.
To reduce costs, the Columbus, IN-based company said it broke off talks with Navistar International Corp. about a joint venture and said it's cutting 600 jobs, which is 100 more than it announced last month.
According to the truck maker’s figures, profit from operations was $2 million. Net income in the year-earlier period was $61 million. The company's sales fell 17% to $1.46 billion.
Cummins engine business’ second-quarter sales fell 29% to $786 million, with shipments to North American heavy truck makers falling 57%. Shipments of heavy-duty engines to other markets declined 36%. Engine sales for medium-duty trucks and buses fell 19% to $147 million, and engine sales for recreational vehicles, cars and light trucks dropped 34% to $151 million.
Cummins had been in talks with Navistar for a venture to make engines that would meet EPA’s ’02 emissions standards. Cummins said dropping the plan will free about $200 million to either reduce debt or invest in its power-generation and filter businesses.