Engine maker Cummins Inc. said Feb. 3 fourth-quarter profit dropped 55% as the company was impacted by the strengthening dollar and demand drops in its engine and components business.
Fourth-quarter net income dropped to $89 million or 45 cents a share, from $198 million, or $1 a share a year ago. Sales fell 6% to $3.29 billion compared with $3.52 billion during the same period in 2007.
Net income included a $37 million pre-tax charge to cover the costs associated with job reductions in the fourth quarter.
"Given our record-setting performance during the first nine months of the year, the rapid drop in demand in the fourth quarter as a result of the global recession was a major disappointment," said Cummins chairman and CEO Tim Solso. "At the same time, we moved quickly to lower our costs and tightly manage our capital spending, and already have taken further action in early 2009."
In an effort to reduce costs, the company began laying off workers at the beginning of the fourth quarter and expects to reduce its workforce by 6% before April. The layoffs include more than 1,400 salaried employees and 1,300 hourly plant workers. In addition, the company reduced executive pay by 10% for 2009.
For the year, sales increased 10% to $14.34 billion, from $13.05 billion in 2007. Profit rose 8% to $801 million, or $4.08 per share, compared with $739 million, or $3.70 per share, the previous year.