Caterpillar Revenues Plunge 25.5 Percent in First Quarter
Caterpillar posted first quarter revenue of $9.46 billion compared to $12.7 billion in the first quarter of 2015, a 25.5-percent plunge. First quarter 2016 profit per share was $0.46, compared to $2.03 per share in the first quarter of 2015.
The company said the results were about what it expected, with continued tough market conditions in many of its businesses, including mining, oil and gas, rail and construction in key developing countries.
“While first quarter results were about as we expected, sales and profits were well below the first quarter of 2015,” said Caterpillar 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 manufacturing costs in the quarter were nearly $500 million lower than the first quarter of 2015.”
As far as its outlook for 2016, Caterpillar officials said they have seen recent increases in commodity prices, some signs of improvement in construction equipment in China and better order activity than expected at Bauma, the world’s largest construction equipment trade fair. “While we are seeing a few positive signals, other parts of our business remain challenged,” the company said in its results filing. “As a result, we have lowered the midpoint of the outlook for 2016 sales and revenues about 2 percent.”
Caterpillar now expects sales and revenues in 2016 to be in a range of $40 billion to $42 billion with a midpoint of $41 million, compared to the previously expected range of $40 to $44 billion. The company expects lower transportation sales from rail, marine and the ending of production of on-highway vocational trucks; as well as lower mining sales and weaker price realization than previously expected.
Sales dropped in all regions for Caterpillar. In North America, sales slid 26 percent with lower end-user demand, particularly in Energy and Transportation, and lowering of dealer inventories in construction industries. In Europe, Africa and the Middle East, sales declined 24 percent, primarily in Africa and the Middle East, where economic conditions were poor because of low oil-and-gas prices. Also, Asia/Pacific sales declined 23 percent, while sales in Latin America plummeted 43 percent, with the biggest drops in Brazil and Mexico.
About the Author
Michael Roth
Editor
Michael Roth has covered the equipment rental industry full time for RER since 1989 and has served as the magazine’s editor in chief since 1994. He has nearly 30 years experience as a professional journalist. Roth has visited hundreds of rental centers and industry manufacturers, written hundreds of feature stories for RER and thousands of news stories for the magazine and its electronic newsletter RER Reports. Roth has interviewed leading executives for most of the industry’s largest rental companies and manufacturers as well as hundreds of smaller independent companies. He has visited with and reported on rental companies and manufacturers in Europe, Central America and Asia as well as Mexico, Canada and the United States. Roth was co-founder of RER Reports, the industry’s first weekly newsletter, which began as a fax newsletter in 1996, and later became an online newsletter. Roth has spoken at conventions sponsored by the American Rental Association, Associated Equipment Distributors, California Rental Association and other industry events and has spoken before industry groups in several countries. He lives and works in Los Angeles when he’s not traveling to cover industry events.