Tough times continue for Cat

THINGS are still pretty tough at US mining equipment maker Caterpillar with the company expecting to lay off more workers during the second half.
Tough times continue for Cat Tough times continue for Cat Tough times continue for Cat Tough times continue for Cat Tough times continue for Cat

A Caterpillar longwall.

Noel Dyson

Sales and revenues and profit per share are also down year on year. Sales and revenues were $10.3 billion for the quarter, down from the $12.3 billion in the second quarter of 2015. Profit per share was US93c a share, down from the $1.31 Cat reported in the second quarter of 2015.

The company had expected to have $US550 ($A730) million restructuring costs for the year. However, additional workforce reductions are expected in the second half of 2016 and that is expected to push the restructuring costs out to $700 million.

Sales and revenues for 2016 are expected to be $40 billion to $40.5 billion – the lower end of the $40-$42 billion outlook Cat provided in its first quarter financial results.

The profit per share outlook is also to be on the lower side. Cat had expected a profit per share for the full year in the range of $3 to $3.70 a share. Now it is looking at $2.75-$3.55 per share at the mid-range of its revised sales and revenue expectation.

On a sectoral basis, Caterpillar’s Resources Industries business reported a $163 million operating loss for the quarter. It had posted a slim $27 million profit a year earlier. Lower sales volumes were to blame.

“Despite a solid second quarter we’re cautious as we enter the second half of the year,” Caterpillar chairman and CEO Doug Oberhelman.

“We’re not expecting an upturn in important industries like mining, oil and gas and rail to happen this year.

“We’re continuing significant restructuring plans, which are designed to bring our cost structure more in line with demand while maintaining our capability to quickly serve our customers when our business recovers.

“Once it does recover, we expect substantial incremental profit improvement, realising the benefits of the tough actions we’re implementing now coupled with our ongoing investments in products and digital capabilities.”

Oberhelman said Caterpillar’s workers were delivering better performance on everything from quality, safety and position to market position.

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