Cummins Inc.'s (CMI) third-quarter earnings fell 59% following last year's record results as the engine maker struggles in the face of weak North American and European trucking and construction markets.

But sales rose 4% from the second quarter, which the company attributed to improved demand from China and a short-term boost in some segments in the U.S.

Results also topped analysts' expectations and Cummins boosted its 2009 forecast, seeing sales falling slightly less than 30% from last year and earnings before interest and taxes making up 6% of sales. The company had seen a sales drop of slightly more than 30% and EBIT being 5% of sales.

"Given the continued weakness in many of our markets, the company performed extremely well in the third quarter," said Chairman and Chief Executive Tim Solso. "The decisive actions we have taken over the past several months have allowed us to remain profitable, generate cash and invest in the company's future in the face of the worst recession in decades."

Cummins has cut about 9,000 jobs--or about 15% of its global work force--and cut other costs since late last year amid the demand slump.

Solso was also remained pessimistic near-term, saying, "We expect the economic climate to remain challenging until late 2010--especially in the United States and Europe." But he added Cummins is "extremely well positioned to take advantage of a number of opportunities and market trends that offer the potential for significant long-term growth."

Third-quarter profit tumbled to $95 million, or 48 cents a share, from $229 million, or $1.17 a share, a year earlier. Net sales fell 31% to $2.53 billion.

Analysts polled by Thomson Reuters expected earnings of 37 cents on revenue of $2.48 billion.

Gross margin fell to 19.9% from 22.2% amid the sales slump.

Shares closed Thursday at $45.92 and didn't trade premarket. The stock is up 72% this year.

-By Mike Barris and Kevin Kingsbury, Dow Jones Newswires; 212-416-2330; mike.barris@dowjones.com