Global Growth Reality Hits As Cummins Cuts Guidance And 1500 Jobs

Tyler Durden's picture

CMI is down over 7% after-hours (to three-month lows) as it seems the 16% cut expectations in Aluminum demand that Alcoa just announced can no longer be ignored. Reality is that Cummins is slashing guidance and cutting jobs in "response to the weakening global economy."

  • *CUMMINS SEES YEAR EBIT ABOUT 13.5%, SAW 14.25%-14.75%  :CMI US
  • *CUMMINS PRELIM 3Q REV. ABOUT $4.1B, EST. $4.425B       :CMI US
  • *CUMMINS SEES 2012 REV. $17B, SAW $18B, EST. $18.11B    :CMI US



Cummins Lowers 2012 Revenue and EBIT Guidance. Company Also Announces Necessary Actions to Respond to Global Economic Slowdown.

Business Wire

COLUMBUS, Ind. -- October 09, 2012

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.

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 capitalize 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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Conman's picture

Here comes the cries for QE4inity

FL_Conservative's picture

OMG....this means that U-3 will be back above 8%.  Quick.....manufacture some more temporary jobs.  Cut their shovels in half or something.

Stoploss's picture

But... But... But...





Surly Bear's picture

It wasn't big enough....

Temporis's picture

Applied Materials, my companies biggest customer announced a 9% cut of their work force late last week... (900 - 1300 people)

Shit runs down hill... Im expecting layoffs where I work sometime later this month. (On top of the 11% *60 people* we lost 2 months back).



4 MORE YEARS... fuck Obama...

davidsmith's picture

Don't worry about Applied.  Romney has big defense contracts lined up for them.

yogibear's picture

Didn't they relocate some of their manufacturing to China?

cossack55's picture

Only their nuke warhead triggering mechanism division. No sweat.

barroter's picture

If it made them a profit...they'd do it.


RSloane's picture

Dear God that's so tragic. I wish you the very best of luck and hope that your job is safe.  

Tommy Gunner's picture

I would have thought that someone posting on ZH would know better than to play these partisan games. 

You are aware that both political parties are completely captured by corporations and their lobbyists and are legally bribed to do their bidding - aren't you?

The only difference betweent the parties is who gave who the most cash - that is reflected in their policies. 

These RAT BASTARDS don't give a fuck about you - in fact I am sure they all laugh at fools who sit glued to these pointless 'debates' as if they meant anything.


You deserve a short hard right hand to the kidneys ... followed by a head butt to the nose (smashing it into your nasal cavity) for posting such utter, utter shit!


Now go and finger your fucking rosary and think about what I have said

Temporis's picture

I would have thought that someone posting on ZH would know better than to play these partisan games.

I said "Fuck Obama" because prior to saying that, all I heard was "Hope and Change" bullshit for the last 4 years and all ive seen is shit getting worse... and how often do you read this site? (Example:

You are aware that both political parties are completely captured by corporations and their lobbyists and are legally bribed to do their bidding - aren't you?

Yep, my post was about Applied laying off 1,300 people on top of the 1,500 Cummin's is letting go. Guessing the only thing you read was "Fuck Obama".... selective reading much libtard?

These RAT BASTARDS don't give a fuck about you - in fact I am sure they all laugh at fools who sit glued to these pointless 'debates' as if they meant anything.

I know this Captian Obvious.

You deserve a short hard right hand to the kidneys ... followed by a head butt to the nose (smashing it into your nasal cavity) for posting such utter, utter shit!

Im thinking you have anger issues... did your boyfriend break up with you and tell you he was going to vote Romney? Is that why your mad? awwww....

Now go and finger your fucking rosary and think about what I have said

This made no sence. When did religon get thrown into a topic about unemployment? Oh wait I said "Fuck Obama" so obviously im Catholic... yah that makes sence. Your post fails. Remember when you slit your wrists after the elecetions because Mr. Hope and Change loses, go up with the razor and not across.

DoChenRollingBearing's picture

Cummins is an interesting company with great long-run prospects, especially with CAT getting out of the truck diesel engine business.  If things are BAD for Cummins, then, yes, things look BAD worldwide.

Ominous, beware.

RacerX's picture

Cummins needs to expand their business to manufacture the "Bernanke" helicopters.

yabyum's picture

DoChen,How can this be? Every Joey-bag-o-donuts in this town has a brand new Dodge diesel truck.

Metalredneck's picture

Working with Cummins products on a daily basis, I see why they are cutting back.  Their only saving grace is that they make a system that works with the 2010 emissions standards.  Navistar just signed up to use their emissions stuff, because their in-house stuff is a big fail.

Detroit Diesel is not much better, so they will be fine, with the right susidies & lobbyists.

Dr. Engali's picture

Hard landing bitchez! Ben you better print faster.

Ineverslice's picture


Bennie..... auto rotate equipped?

Squid Vicious's picture

I just Cummins'd my pants

Sweet Chicken's picture

How the fuck is gold down in midst of all of this bullshit?!

fonzannoon's picture

The sheep are running towards the burning house. They will turn eventually.

ar01's picture

Gold crashed when the markets tanked in 2008 -- when a recession hits, everyone flees to liquidity/safety. 

Sweet Chicken's picture

Begs the question, what is safe in this fiat drenched world we live in?!?!

davidsmith's picture

Try defense-related stocks.  Romney will double defense spending in two years.  Don't bother with ANY big media baloney, liberal or conservative.  Mitt is busy spreading the word through his surrogates: BIG BIG BIG defense increases on the way.  See how Obama kept referring to "increases the Pentagon says it doesn't need" in his HORRIBLE debate?  He knows what's on the way.  He also found out that, yes, although Romney's defense increases are going to be PURE welfare and graft, nobody cares because PEOPLE NEED MONEY.  


Poor Prince Barack, he's learned the hard way that food stamps and hope are not enough to get him reelected, especially when people realize he's a Goldman Sachs whore/hood:

jonjon831983's picture

Any ideas which ones would be attractive?  Don't think I'd want to go via ETFs.

davidsmith's picture

Electric Boat.

Sikorsky Aircraft

General Electric Co.

Pratt and Whitney

LetThemEatRand's picture

Interesting coincidence that GE's former CEO went full out anti-Obama earlier this week (not that I disagree with him, but clearly for different reasons).

azzhatter's picture

I hate GE with a passion but I think Immelt is already slobbering on Romney's knob. 

davidsmith's picture

No need.  Are you really telling me the trust department Republicans don't know it's time to rev up defense spending, and have already passed the word?  This is all baked in.  Things will crash sufficiently to oust Krazy Barry, and then we proceed with defense ramp up.


The pathetic joke of all this is the inherent weakness of liberal Democrats: they have this fixation on these little, pathetic prima donna princes (think Carter, think Kerry, think Krazy Barry) and keep nominating them, only to see them stumble.  The Democratic Party is sick sick sick.  All Obama's supporters are sick sick sick.  And then when these little coddled brats have to face reality, they crumple.  


There won't be any recovery for Krazy Barry in the next debates.  What can he say in the defense debate except, "I won't spend more money"?  That'll go over like a turd in the punchbowl.  What a clown!  Too prissy to stoop to the defense spending trough.  But Mitt will!!  So you'll get this whorehound Barry saying in a snit, "Well, if you all don't appreciate me, I'll just take my ball and go home!"  Good riddance to this monster whore!


jeff montanye's picture

obama whored it up with the banksters and they are now after the new meat with the magic underpants anyway.  he should have prosecuted the shit out of them, reorganized the banks a la the nordic banking crisis, the economy would have been better and he would have been reelected if he showed up for the debate drunk.

jonjon831983's picture

Sikorsky + P&W

Translation: UTX: United Technologies


Electric Boat

GD: General Dynamics

jonjon831983's picture

Managed to dig up a BI post about top 25 "defense" companies... pretty nice, has quick synopsis of how they're involved.


General Dynamics... GD 65.94 -0.51 (-0.77%) 23.26B 978,548.00 66.52 66.89 65.94
United Technologies... UTX 77.33 -1.04 (-1.33%) 70.51B 4.12M 78.21 78.49 77.33
Honeywell International... HON 60.68 -0.60 (-0.98%) 47.36B 3.11M 61.31 61.36 60.51
Oshkosh Corporation OSK 27.24 -0.63 (-2.26%) 2.50B 601,092.00 27.62 27.94 27.17
The Boeing Company BA 70.64 +0.07 (0.10%) 53.11B 4.12M 70.7 71.21 70.36
Lockheed Martin... LMT 93.72 -0.29 (-0.31%) 30.40B 806,019.00 94.07 94.82 93.71
CACI International Inc CACI 49.26 -0.43 (-0.87%) 1.12B 421,936.00 49.64 50.07 49.2
Goodrich Corporation GR 127.48 16.05B 0.00
Navistar International... NAV 22.26 -0.55 (-2.41%) 1.53B 1.39M 22.8 22.95 22.23
Mantech International... MANT 22.01 -0.58 (-2.57%) 812.95M 102,175.00 22.62 22.62 22
Hewlett-Packard Company HPQ 14.37 -0.09 (-0.62%) 28.25B 29.64M 14.4 14.49 14.1571
Textron Inc. TXT 25.26 -0.37 (-1.44%) 7.10B 3.16M 25.65 25.79 25.19
Rockwell Collins, Inc. COL 53.51 -0.51 (-0.94%) 7.61B 915,460.00 54.04 54.41 53.35
Alliant Techsystems Inc. ATK 51.19 -0.75 (-1.44%) 1.67B 182,277.00 52.03 52.03 50.91
URS Corp URS 35.65 -0.37 (-1.03%) 2.74B 508,715.00 36 36.09 35.52
KBR, Inc. KBR 29.67 -0.67 (-2.21%) 4.37B 1.27M 30.29 30.38 29.56
Exelis Inc XLS 10.87 -0.15 (-1.36%) 2.03B 632,068.00 11.04 11.04 10.765
General Electric Company GE 22.62 -0.30 (-1.31%) 238.84B 39.18M 22.94 22.97 22.6
Computer Sciences Corp. CSC 31.28 -0.65 (-2.04%) 4.86B 991,255.00 31.84 31.91 31.01
SAIC, Inc. SAI 11.29 -0.09 (-0.79%) 3.86B 2.52M 11.4 11.43 11.24
L-3 Communications... LLL 72.72 -0.48 (-0.66%) 7.02B 300,017.00 73.25 73.68 72.63
Raytheon Company RTN 55.02 -0.30 (-0.54%) 18.27B 1.77M 55.32 55.5799 54.97
Northrop Grumman... NOC 69.00 -0.09 (-0.13%) 17.06B 1.27M 69.11 69.56 68.69

sessinpo's picture

PMs and most every commodity crashed in deflationary periods. The reason: people needed to raise cash to service debts still denominated in fiat currency. In other words, a person has a mortgage or some other debt obligation. That person has $100k in gold. But creditor won't take your gold. Creditor wants cash. Debtor has to sell gold holdings to raise cash to pay creditor which puts downward pressure on gold.


So that takes you back to the debate of inflationary or deflationary. I would think that after countless trillions printed, you'd have hyperinflation by now unless, quite possibly all that money printed, is servicing trillions of dollars in debt - and in a way disappearing, not circulating through the ecnomony like hyperinflationary pressures would require. Instead, the money is being hoarded for payments and future payments in an uncertain economic future.

slaughterer's picture

The Cummins guidance cut will damage a wide range of stocks tomorrow.  --At least, in a sane world.  

fonzannoon's picture

This is just old. Cummins, Starbux, Qualcomm....etc etc etc....all will warn...all will guide down.....the only question is will they be bought again....

Dr. Engali's picture

Rollover time, the reality of margin squeezes will start to hit home.

fonzannoon's picture

Doc I think you are using too much logic. You are rationally thinking this through and coming to conclusions that should be drawn by intelligent people....and that is where you lose me. In my world of infinite money printing the rules change in the middle of the game and somehow we end up 3 months from now all scratching our heads at how they "did it again". The economy continues to fall apart as the market becomes some other kind of animal that no longer bears any resemblance to whatever it ised to be. Which I guess, was some kind of economic barometer.


Dr. Engali's picture

I agree whole heartedly Fonz. We've been here a while wondering the same thing..."what's holding this thing up"? But I believe QE is priced in,and I don't think the market can be pushed up to new highs without even more stimulus than we are currently getting. They may be able to keep it churning sideways ( and I struggle with that) , but I don't think there is any upside.

fonzannoon's picture

Man if you think about what's on the line gotta believe (at least I do anyway) Pension funds etc. etc. etc. have all fallen for the don't fight the fight line and are all in here. If there is a big correction and some of these entities severely miss their funding targets it's just going to escelate things....thats why I think the fed will ditch all the rules if they have to and full blown out in the open buy everything eventually to (try) prop this bitch up.

Dr. Engali's picture

I think that's inevitable. The same path they took in Japan, but their market still ended up much lower. I don't know maybe I'm wrong but it sure feels like it's ready to turn south.

fonzannoon's picture

By the way, I was wandering around the Steeler's game under the scoreboard with a beer right before the 3rd quarter started and got nailed in the head with a practice field goal that must have went wide. It was awesome. I have the ball.

Dr. Engali's picture

You're f..Ing kidding me?! That is cool.

Nobody For President's picture

Nailed in the HEAD?

Well, that explains a lot...

Cursive's picture


Strong like bull diesel.

Meesohaawnee's picture

if it were really a "market" so true