Cummins warns on sales, shares slide

(Reuters) - U.S. engine maker Cummins Inc cut its full-year sales forecast on Tuesday, citing weaker U.S. orders from truck and power generation customers, a stronger dollar and softer demand in emerging markets, but it also raised its dividend.

Shares of Cummins slid 10 percent in afternoon trading after the company said it expects second-quarter sales of about $4.45 billion, and warned that it sees full-year sales "in line" with 2011 rather than growing by 10 percent as it had earlier forecast.

Analysts, on average, had expected second-quarter sales of $5.1 billion and 2012 sales of just under $20 billion.

"Order trends in the U.S. for trucks and power generation equipment have softened and demand in Brazil, China and India is not improving as we had previously expected," Chief Executive Tom Linebarger said in a statement.

Separately, Cummins said it would raise its quarterly dividend by 25 percent to 50 cents a share.

Linebarger cited "strong cash flow and low levels of debt" for investment in future growth and increased dividend.

Cummins shares were down 10 percent at $85.83, its lowest level since last December.

Cummins, due to report results on July 31, is the second major industrial company this week to warn about quarterly results. On Monday, Dover Corp cut its 2012 profit forecast, citing weakness in Europe. (Reporting by Nick Zieminski and Lynn Adler in New York; Editing by Gerald E. McCormick and Carol Bishopric)