RSS178 Caterpillar’s financial results for 2016 reflect the tough trading conditions that US construction machine firms in particular have been experiencing. In another development, the firm is looking to move its global corporate headquarters from Peoria to Chicago.
One of the key issues for the firm’s financial results has been the strength of the US$ against other global currencies. This has made quality products from firms based in markets such as Europe, Japan or South Korea highly competitive on price for customers. As a result Caterpillar’s sales have been affected, along with those of other US construction machinery firms. Caterpillar’s sales revenue for 2016 stood at US$38.587 billion, slightly lower than expected and a drop of 18% from the $47.011 billion for 2015. Sales for the fourth quarter in 2016 stood at $9.574 billion, compared with $11.03 billion in 2015. Period costs and variable manufacturing costs meanwhile were $2.3 billion lower in 2016, following restructuring and cost reduction actions.
Caterpillar’s CEO Jim Umpleby said, “Our results for the fourth quarter continued to reflect pressure in many of our end markets from weak economic conditions around much of the world. Our team did a great job in the quarter, aligning our cost structure with current demand while preserving capacity for the future. I’m confident we are focusing on the right areas: controlling costs, maintaining a strong balance sheet and investing in the key areas important to our future.”
There are some signs of a recovery for 2017 but levels of risk and uncertainty continue. Umpleby commented, “We continue to execute in a challenging economic environment and are focused on improving operating margins, profitability and shareholder returns. While we see signs of positive activity in some of our key end markets, the overall economic environment remains challenging.”
At the same time, the company has announced its plans to move its global corporate headquarters from Peoria in Central Illinois to Chicago. This will see a number of senior executives moving to a leased building by the end of 2017. The new headquarters will employ 300 people when the transition phase has been completed. The location of the new headquarters within Chicago has yet to be revealed however. The firm previously planned to build a new headquarters in Peoria, but this project was halted when Caterpillar commenced its restructuring programme in 2015. Despite the headquarters moving, the firm emphasises that its existing research and development and construction machine manufacturing operations, which have large workforces, will remain in Peoria. Umpleby explained, “Caterpillar’s board of directors has been discussing the benefits of a more accessible, strategic location for some time. Since 2012, about two-thirds of Caterpillar’s sales and revenues have come from outside the United States. Locating our headquarters closer to a global transportation hub, such as Chicago, means we can meet with our global customers, dealers and employees more easily and frequently.”
One of the key issues for the firm’s financial results has been the strength of the US$ against other global currencies. This has made quality products from firms based in markets such as Europe, Japan or South Korea highly competitive on price for customers. As a result Caterpillar’s sales have been affected, along with those of other US construction machinery firms. Caterpillar’s sales revenue for 2016 stood at US$38.587 billion, slightly lower than expected and a drop of 18% from the $47.011 billion for 2015. Sales for the fourth quarter in 2016 stood at $9.574 billion, compared with $11.03 billion in 2015. Period costs and variable manufacturing costs meanwhile were $2.3 billion lower in 2016, following restructuring and cost reduction actions.
Caterpillar’s CEO Jim Umpleby said, “Our results for the fourth quarter continued to reflect pressure in many of our end markets from weak economic conditions around much of the world. Our team did a great job in the quarter, aligning our cost structure with current demand while preserving capacity for the future. I’m confident we are focusing on the right areas: controlling costs, maintaining a strong balance sheet and investing in the key areas important to our future.”
There are some signs of a recovery for 2017 but levels of risk and uncertainty continue. Umpleby commented, “We continue to execute in a challenging economic environment and are focused on improving operating margins, profitability and shareholder returns. While we see signs of positive activity in some of our key end markets, the overall economic environment remains challenging.”
At the same time, the company has announced its plans to move its global corporate headquarters from Peoria in Central Illinois to Chicago. This will see a number of senior executives moving to a leased building by the end of 2017. The new headquarters will employ 300 people when the transition phase has been completed. The location of the new headquarters within Chicago has yet to be revealed however. The firm previously planned to build a new headquarters in Peoria, but this project was halted when Caterpillar commenced its restructuring programme in 2015. Despite the headquarters moving, the firm emphasises that its existing research and development and construction machine manufacturing operations, which have large workforces, will remain in Peoria. Umpleby explained, “Caterpillar’s board of directors has been discussing the benefits of a more accessible, strategic location for some time. Since 2012, about two-thirds of Caterpillar’s sales and revenues have come from outside the United States. Locating our headquarters closer to a global transportation hub, such as Chicago, means we can meet with our global customers, dealers and employees more easily and frequently.”
