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Cummins Inc.’s stock dropped 5.2 percent Tuesday after the engine maker lowered its outlook for the year based on weaker than expected third-quarter sales.
Cummins reported third-quarter sales of $4.3 billion, up 3.6 percent compared with the third quarter of 2012. Sales in engine and power generation segments fell compared with a year earlier.
Third-quarter profit was $355 million, up 0.85 percent from the third quarter of 2012.
Cummins said in a news release that it expects sales for this year to be about 3 percent below last year’s results. Three months ago, the company had predicted 2013 sales would match 2012 levels.
“Revenues were below our expectations as we continue to face an environment of weak demand for capital goods in most of our major markets,” Chairman and CEO Tom Linebarger said in the release.
Cummins’ stock closed at $127.90 Tuesday, down $7.01, or 5.2 percent, after being down more than 9 percent in morning trading.
Rich Hummel, director of research for Columbus-based investment adviser Kirr, Marbach & Co., said analysts were expecting more significant improvement in the third and fourth quarters and now are beginning to doubt projections for next year as well.
The company is focusing on lowering costs, which will position the company well for when market conditions improve, Linebarger said.
When that will happen, however, is unclear, Hummel said.
Cummins had been meeting expectations through the first half of the year, when markets projected slightly better results than the year before. However, more significant improvements were expected for the third and fourth quarters, which did not happen in the third quarter and which the company now says will not happen in the fourth quarter either.
That also puts into question the company’s projections for 2014, in which Cummins has said it expects 10 percent growth, Hummel said.
“People’s expectations for (2014) have to come down now,” he said.
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