Caterpillar posted its first quarterly loss since 1992 due to redundancy charges and an overall sales slump, finishing the March quarter $US112 million in the red.
The equipment major said it was the $558 million in redundancy costs that pushed it into negative territory, implying the company would have made a profit of $446 million without the costs of cutting staff.
The $112 million loss compares with the $922 million profit recorded for the first calendar quarter of 2008 – down a whopping $1.034 billion.
"This is an extremely difficult time for employees affected by this severe economic downturn, and providing them with financial assistance and transitional support is important,” Caterpillar chairman Jim Owens said.
“While redundancy costs have been a considerable expense, it's the right thing to do for our people.
"Our business units are making the tough decisions necessary to respond to this widespread and sharp global recession.”
Caterpillar has lowered its outlook for calendar 2009, and is now expecting revenue of approximately $35 billion for the year, down from the $40 billion forecast in January.
Meanwhile, Terex Corporation announced a first quarter loss of $74.9 million, as its sales in the construction and mining equipment sectors declined.
The Connecticut-based company said the loss was extreme compared to the profit of $163.3 million reported in the first quarter of 2008.
Net sales tumbled 45% to $1.3 billion, as declining demand for aerial work platforms, construction and materials processing continued to hurt the company.
“A minimum of $100 million of costs are targeted to be taken out of the construction business on an annual basis,” the company said.
Net sales in the materials processing and mining business fell 34% on the back of weak demand for processing equipment.
However, the mining side benefited from a favourable product mix orientated towards larger trucks, as well as price increases for shovels and trucks.
Terex president and COO, and interim president for Terex Construction, Tom Riordan said the demand for mining equipment in the quarter was being driven by strength in thermal coal and gold, although second quarter orders were showing signs of slowing demand, particularly for trucks and drills.
The company also accepted after-tax charges of $30 million associated with restructuring programs and a continued reduction in production levels.
"The turmoil from the global credit crisis and economic slowdown has quickly and deeply impacted sales for our industry, with certain sectors down almost 75 per cent from year-ago levels," chief executive officer Ron DeFeo said.
“In response we are aggressively reducing costs, with manufacturing spending in the first quarter of 2009 down 39 per cent from the peak spending level in the second quarter of 2008.”
He added Terex expected to cut spending by $300 million per quarter by end of year and would begin operating on a build-to-order basis.
Terex has been slashing jobs and inventories since June 2008, but the size of the demand shift caught the company off guard.
The company also lowered its outlook for full-year sales and said a decline of 40-45% was expected, compared to 2008.
Previously, the company had said those sales were expected to decline in the range of 30-35%.
“We remain confident in the long-term outlook for our business as we concentrate on managing through these immediate challenges,” DeFeo said.