Cummins misses profit expectations on high manufacturing costs

(Reuters) – Engine maker Cummins (NYSE:) reported a second-quarter profit on Thursday that missed analysts’ estimates, hurt by high manufacturing costs.

The company’s shares fell 3.8% to $252.20 in premarket trading.

Increasing production costs have battered the auto industry’s earnings over the months. Despite taking pricing actions, automakers and parts suppliers have struggled to cover costs related to raw materials and labor.

Cummins has also been grappling with weak demand in China as new emission regulations and inventory build up slow down recovery in the market.

The company reported a second-quarter profit of $5.05 per share, missing analysts’ estimates of $5.29, according to Refinitiv.

“While we see demand remaining strong through 2023 and we are maintaining our guidance on revenue and profitability, we continue to closely monitor global economic indicators,” CEO Jennifer Rumsey said.

Cummins’s new power segment, Accelera, which designs, manufactures, sells and supports hydrogen production solutions as well as electrified power systems, also incurred an operating loss of $114 million on increased development costs.

However, the company’s revenue for the second quarter rose 31.2% to $8.64 billion, compared with estimates of $8.37 billion.