Caterpillar has recorded first quarter revenues of US$ 9.5 billion, representing a year-on-year fall of US$ 3.2 billion.
The US equipment manufacturer also saw its profit per share decrease some $ 1.57 to $ 0.46 per share from the same period a year earlier.
Doug Oberhelman, chairman and CEO, said the company expected such results, given a sales decline across the company. He added, “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.”
The company reflected on its outlook for 2016 saying that it had seen recent increases in commodity prices, some signs of improvement in construction equipment in China and better order activity than expected at Bauma, Germany.
Sales and revenues for the year 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, 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 per share, or $ 3.70 per share excluding restructuring costs. The previous profit outlook was $ 3.50 per share, or $ 4.00 per share excluding restructuring costs at the midpoint of the previous sales and revenues outlook.
The company’s 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, it said.
Oberhelman said, “While many of the industries we serve are challenged today, we’re looking ahead and investing for the future. We’re investing substantially in R&D (research and development), driving forward on our lean journey, continuing implementation of across the table with our dealers and accelerating our digital strategy.”