JAMESTOWN — A 9% decrease in fourth quarter revenues have led Cummins Inc. officials to forecast a decrease in 2020 revenues of between 8 and 12 percent.

Lower truck production in North America and weaker demand in global construction, mining and power generation markets drove the majority of the revenue decrease, company officials said during a conference call with analysts. Revenue decrease in 2020 are expected to be driven by lower truck production in North America, Europe, China, and India as well as lower projected demand in off-highway markets, including global Power Generation, mining, oil and gas, and construction markets.

Those numbers prompted Cummins to stop production of some underperforming products in the second half of 2019 while taking other actions to cut costs, resulting in $119 million pre-tax savings, or $90 million after taxes. The restructuring is expected to save an additional $250 to $300 million in 2020, according to Mark Smith, Cummins chief financial officer.

“The actions we have taken will mitigate an expected slowdown in revenues in 2020 and position the company for stronger performance as market demand improves,” said Tom Linebarger, Cummins chairman and chief executive officer. “We will continue our investments in new technologies and new product launches in 2020 as we have in prior periods of lower demand which we believe will continue to improve our strategic position in the industry and sustain our profitable growth. As always, we remain committed to returning cash to shareholders through the economic cycle.”

Sales in 2019 were $23.6 billion, a 1% decrease from 2018 sales. Engine sales decreased 5% in 2019, with lower demand in the Chinese light commercial vehicle market, North American and European construction markets and the global bus market were partially offset by higher demand for pickup trucks in North America. Heavy and medium-duty truck revenues in North America were flat compared to 2018. Cummins say North America revenues increase 3% in 2019 because of higher demand for pickup trucks and power generation equipment, though medium and heavy-duty truck sales were flat compared to 2018 while sales of engines to construction and oil and gas markets declined. Production of heavy-duty trucks increased to 303,000 units, an increase of 6% from 2018 levels, with production declining in the third and fourth quarter as the industry backlog in orders declined.

“Our market share for the full year was 32% down two percentage points from 2018 as OEMs prioritized production of their own engines when making cuts to production in the second half of the year,” Linebarger said. “The market size for medium-duty trucks was 138,000 units in 2019 representing another strong year of demand. We maintained our clear leadership in the market with full year market share of 80%. 2019 marked another strong year for pickup truck sales in North America. We shipped 148,000 engines to our pickup truck customers in 2019 including the highest number of engines for Ram pickups in over 10 years. During the third quarter, we decided to end production of our ISV 5-liter engine which was primarily sold to Nissan for use in pickup truck applications.”

Linebarger said 2020 projects to be a difficult year. The overall 8% to 12% revenue decrease is expected to include a decrease in heavy and medium-duty truck production in North America, Europe, China and India. Industry production for heavy-duty trucks in North America is projected to be 185,000 units in 2020, a 40% decrease year-over-year. The industry enters 2020 with a backlog of 123,000 units, less than half the 297,000 units when entering 2019, as order rates were consistently less than truck production throughout the year.

“We expect orders to remain weak in 2020, with continued weak freight activity resulting in excess capacity and lower used truck market prices,” Linebarger said.

Because orders and revenue are expected to be weak, Linebarger and Smith both said the company has been aggressive in cost-cutting measures, most of which were expected to take place by the end of April at the latest so that the company can save as much money as possible for the rest of the year.

“And so we did — definitely took a pretty conservative view about how revenues would come out, which is now feeling pretty close to right for us,” Linebarger said. “And so we did all — as Mark said, we did all our work on the expense line. We took our actions make sure we got them done in the first quarter, in fact mostly by the end of January, so we could benefit in the year from the savings from those not just drag them out.”