“While first-quarter results were about as we expected, sales and profit were well below the first quarter of 2015. 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 manufacturing costs in the quarter were nearly $500 million lower than the first quarter of 2015,” said Caterpillar Chairman and Chief Executive Officer Doug Oberhelman.
Looking ahead he continued, “We have seen recent increases in commodity prices, some signs of improvement in construction equipment in China and better order activity than we expected at
The firm says that sales and revenues in 2016 are expected to be in a range of $40 to $42 billion with a midpoint of $41 billion. The previous outlook was a range of $40 to $44 billion with a midpoint of $42 billion. The decline in the midpoint of the sales and revenues outlook range is a result of several factors that, while not individually large in the context of the outlook, collectively add up to about $1 billion. Those factors include lower transportation sales (rail, marine and the ending of production of on-highway vocational trucks), lower mining sales and weaker price realisation than previously expected.
The profit outlook at the midpoint of the sales and revenues range is now $3.00/share, or $3.70/share excluding restructuring costs. The previous profit outlook was $3.50/share, or $4.00/share excluding restructuring costs at the midpoint of the previous sales and revenues outlook. The expected decline in sales and revenues and an increase in expected restructuring costs are the primary reasons for the decline in the profit outlook.
Restructuring costs are now expected to be about $550 million in 2016, up $150 million from the previous outlook. The decision to end production of on-highway vocational trucks is the primary reason for the increase in restructuring costs.
Caterpillar’s latest results show some positive signals
Caterpillar has released its first quarter results for 2016, which show some positive results although market conditions remain tough. The firm’s first-quarter 2016 sales and revenues hit US$9.5 billion, down from $12.7 billion in the first quarter of 2015. First-quarter 2016 profit/share of $0.46 was down from a profit of $2.03/share in the first quarter of 2015. Excluding restructuring costs, profit/share was $0.67, compared with $2.07/share in the first quarter of 2015.
