By Timothy Aeppel
Of THE WALL STREET JOURNAL
Cummins Inc. (CMI) reported better-than-expected third quarter
results but warned that 2010 would remain a difficult year for the
diesel-engine maker, especially in the advanced economies of North
America and Europe.
"We expect next year, especially the first six months, to be
even more challenging than this year," Chief Executive Tim Solso
said.
(This story and related background material will be available on
The Wall Street Journal Web site, wsj.com.)
Cummins expects strong growth in developing markets such as
China, India and Brazil, but this will not be enough to offset
headwinds it faces in those big developed markets. Cummins is a
major producer of truck engines, a market where the company said it
expects to see U.S. demand fall 75% in the first half of next year,
compared with the second half of 2009.
U.S. truck sales are being impacted by new clean-air rules,
which are causing a rush of sales this year by buyers trying to
avoid the higher-priced cleaner engines that go on the market at
the start of next year.
The company said it believes the third quarter marked the low
point for its power-generation business, which makes generators
used in applications such as construction sites and in recreational
vehicles. That business fell sharply this year as customers used
inventories rather than buying new machines. Order rates going up
in India and China in particular, the company said.
"But we don't think Q1 or Q2 (2010) will be great for power
generation, because the U.S. and Europe will be down year over
year," said Tim Linebarger, the company's chief operating
officer.
-By Timothy Aeppel, The Wall Street Journal; 212-416-2821;
timothy.aeppel@wsj.com