JAMESTOWN – One of Chautauqua County’s largest manufacturers says they have remained profitable amid the COVID-19 pandemic, but, is preparing for a decrease in demand going forward.
Cummins Inc. reported a 5 billion dollar decrease in the first quarter of 2020, down 17 percent from the same quarter last year.
“We delivered strong profitability in the first quarter, supported by the commitment of our employees to serve our customers and the benefit of cost reduction actions we initiated in the second half of 2019,” said Chairman and CEO, Tom Linebarger in a statement Tuesday. “Amidst the unprecedented COVID-19 pandemic, the health and safety of our employees and the communities in which we operate is our top priority.”
Due to uncertainty related to the pandemic, the Cummins did not provide revenue or profitability guidance for this year.
While customer operations have begun to resume activity, the company does expect a significant impact to its second quarter results due to disruptions across customer and supplier operations and lower end market demand.
Officials say lower truck production in North America and weaker demand in global construction, mining, and power generation markets drove the majority of the revenue decrease so far.
Sales in North America declined by 16 percent while international revenues decreased by 17 percent led by declines in Europe, Asia Pacific, Latin America, India, and China.
In response to the anticipated shortfall, the company recently announced a set of cost reduction actions, including a temporary reduction in salaries.
“Our teams are working hard to support the global economy, leveraging our flexibility and strong supplier network to help our customers deliver essential products and support response efforts,” furthered Linebarger. “Given the significant impact the pandemic will have on demand across our industry in the second quarter and beyond, we are continuing to take actions to reduce cost and boost our already strong liquidity.”
The company is also lowering its targeted capital expenditures by more than 25 percent as compared to 2019 and says they continue to closely monitor market conditions and adjust plans accordingly.
For more on the first quarter report, click here.