Cummins Power Generation Inc., a division of Cummins Inc. (CMI - Analyst Report) , revealed that it will raise prices up to 3% for most of its diesel- and gas-powered generator sets, automatic transfer switches and other products globally in order to adjust with the global market conditions and foreign exchange rates. The price changes will take effect for shipments made after January 1, 2013.
In May this year, the company’s power generation division in India, Power Generation Business of Cummins India Limited, announced a price increase of up to 3% for its diesel generator sets and generator set engines in the range of 7.5 kVA and 3000 kVA due to the same reason. The new pricing took effect from June 1.
Cummins Power Generation provides innovative solutions for power needs in commercial, industrial, recreational, emergency and residential sectors. Its distributors are present in more than 190 countries around the world.
It supplies alternators, generator-drive engines and pre-integrated power system. It also provides services including system design, project management, operations and maintenance contracts to development of turnkey power plants.
Cummins, a Zacks #3 Rank (Hold) Stock, reported a 19.1% fall in adjusted earnings per share to $1.78 in the third quarter of 2012 from $2.20 in the year-ago quarter. Net income declined 20.6% to $336.0 million from $423.0 million in the third quarter of 2011. With this, profits in the quarter missed the Zacks Consensus Estimate by 6 cents per share.
The decrease in earnings was due to uncertainty in most of the markets served by the company. The company has actively responded to this situation by canceling or delaying projects, reducing production at some of its manufacturing plants, cutting discretionary expenses. It also plans to reduce workforce by 1000 to 1500 people by the end of this year.
The company’s revenues for the quarter dipped 11% to $4.1 billion, lower than the Zacks Consensus Estimate of $4.2 billion. The decline in revenues was driven by a 21% decline in revenues in the international market, which offset the 2% rise in revenues in North America.
Cummins expects revenues of $17.0 billion for 2012, which is lower than the previous guidance of $18.0 billion. It also expects EBIT margin of 13.5%, down from the previous estimate of 14.25%–14.75% during the year.
Cummins is a leading worldwide designer, manufacturer and distributor of diesel and natural gas engines, electric power generation systems, and engine-related components, fuel systems, controls and air handling systems. The company faces stiff competition from Caterpillar Inc. (CAT - Analyst Report) and Navistar International Corporation (NAV - Analyst Report) .