Cat sales and profits down in first quarter; outlook lowered again
- Details
- Published on Friday, 22 April 2016 12:18
- Written by Paul Gordon
Caterpillar Inc. said Friday its first quarter sales and profits were down from a year earlier but that the numbers posted were not unexpected.
The company still scored a profit for the quarter and its balance sheet remains strong, but the immediate outlook doesn't call for much improvement, the Caterpillar release said. That outlook was lowered for the rest of 2016.
The company had a profit of 46 cents a share, well off the profit of $2.03 a share posted in the first quarter of 2015. But sales and revenues were down 26 percent, from $12.7 billion to $9.5 billion, and restructuring costs took another 21 cents a share from the bottom line, the company said.
"While first quarter results were about as we expected, sales and profit were well below the first quarter of 2015," said Chairman and CEO Doug Oberhelman. "Sales declined across the company with substantial reductions in construction, oil and gas, mining and rail. While many of the industries we serve are challenged, we remain focused on what we can control: the quality of our products, our market position, safety in our facilities and continued restructuring and cost reduction. In fact, our period costs and variable manufacturinng costs in the quarter were nearly $500 million lower than the first quarter of 2015."
Still, Caterpillar lowered its outlook for the rest of the year, including a 2 percent drop in the 2016 outlook for sales and revenues to a midpoint of $41 billion, down from $42 billion. The profit outlook dropped from $3.50 a share, or $4 a share excluding restructurig costs, to $3 a share, or $3.70 without the restructuring costs.
The company attributed the lower outlook to continued challenges in several segments, eve with signs of improvement in commodity prices and construction equipment sales in China.
Caterpillar inncreased its expected restructuring costs for the year by $150 million, to $550 million, primarily because of its decision the end production of on-highway vocational trucks.
But Oberhelman said Caterpillar is looking ahead and investing for the future. "We're investing substantially in (research and development), driving forward on our Lean journey, continuing implementation of Across the Table (process) with our dealers and acceleratinng our digital strategy," he said.
Referring more to the digital strategy, Oberhelman said the companhy is working with digital partners to develop "the data architecture that will make our products smarter and help our customers improve productivity and safety. Our goal is to help our customers be more productive, better manage their fleets and make more money with Caterpillar than they could with our competitors."
"One thing that I am certain of is that it's times like these when the Caterpillar team demostrates the innovation and ambition to be the leader in all we do."
The investment community reacted favorably to the report early in the day, even though the profit excluding restructuring costs was a penny lower than the consensus of a analysts who cover Caterpillar, 68 cents a share. However, sales and revenues were higher than estimates.
By the end of trading, however, Caterpillar stock was at $78.32 a share, down 34 cents.
Other highlights from the first quarter report include:
- Because of a change in accounting principle for pension and postretirement plans, Caterpillar recast its 2015 earnings to reflecr actuarial gains and losses when they occur rather than amortizing them. Therefore, the 2015 profit was $4.18 a share rather than $3.50 a share. The first quarter 2015 profit was recast from $1.81 a share to $2.03.
- Caterpillar's global workforce stood at 114,300 as of March 31, a decrease of 15,100 from a year earlier.
- Of those cuts, 8,000 were from the U.S. workforce and 7,100 from the non-U.S. workforce.
- Sales and revenues were down in ever geographiic region of the world served by Caterpillar. They were down 24 percent in North America and 41 percent in Latin America.
