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Late Wednesday evening news from Beijing time, Cummins Engine Corp (CMI) revised downward its fourth quarter results as of Dec. 31 due to higher-than-expected warranty costs.
The company halved its fourth-quarter earnings figures released on February 3, from $89 million, or 45 cents per share, to $43 million, or 22 cents per share.
The 2008 full-year profit figure was cut from the original $801 million, or $4.08 per share, to $755 million, or $3.84 per share.
Cummins said that the revision was due to the increase in the warranty liability for mid-range engine products introduced in 2007, and as a result, the maintenance cost was higher than expected.
The company said that product failures and maintenance costs resulted in an increase of about $82 million in expenses in the fourth quarter.
The company said in a statement: "The company is actively responding to product problems and has taken measures to reduce the failure rate of these products."
Cummins also reiterated that it expects revenue for the fiscal year 2009 to decline by approximately 20% year-on-year, from $14.34 billion in fiscal 2008 to $11.47 billion.
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