Caterpillar today announced profit per share of $0.48 for the third quarter of 2016, a decrease from $0.94 per share in the third quarter of 2015. Third quarter sales and revenues of $9.2 billion dropped 16.4 percent compared to $10.96 for the same period in 2015.
“Economic weakness throughout much of the world persists and, as a result, most of our end markets remain challenged,” said Caterpillar chairman and CEO Doug Oberhelman. “In North America, the market has an abundance of used construction equipment, rail customers have a substantial number of idle locomotives, and around the world there are a significant number of idle mining trucks. However, there were a few bright spots this quarter. Both the construction industry and our machine market position improved in China. Most commodity prices, while low, seem to have stabilized. Parts sales have increased sequentially in each of the last two quarters. Our machine market position and quality remain at high levels and our work on Lean and restructuring are continuing to help us lower costs.
“I’m pleased with how Caterpillar has responded and our team’s incredible focus on reducing costs and pulling through profit despite sluggish end markets. In the third quarter, despite a $1.8 billion decline in sales and revenues, our operating profit pull through was significantly better than our target range. Lower variable manufacturing costs of $234 million and lower period costs of $420 million enabled us to offset much of the negative impact from a weak sales environment and continue investment in products and digital capabilities.”
Caterpillar’s full-year outlook for 2016 sales and revenues is about $39 billion, and profit of $2.35 per share or $3.25 per share excluding restructuring costs. The previous outlook for 2016 expected sales and revenues of $40 to $40.5 billion, with profit at about $2.75 per share. The company at this point expects 2017 to be somewhat similar, with improvement in the second half if commodity prices continue to stabilize.
“We remain cautious as we look ahead to 2017, but are hopeful as the year unfolds we will begin to see more positive momentum,” said Oberhelman. “Whether or not that happens, we are continuing to prepare for a better future. In addition to substantial restructuring and significant cost reduction actions, we’ve kept our focus on customers and on the future by continuing to invest in our digital capabilities, connecting assets and jobsites and developing the next generation of more productive and efficient products.”
Sales declined in all regions for Caterpillar in the third quarter. In North America, sales decreased 20 percent primarily because of lower end-user demand for infrastructure, continuing declines in mining and the impact of low oil prices. In Europe, Africa and the Middle East, sales declined about 20 percent because of weak economic conditions, resulting from continued low oil and other commodity prices and an uncertain investment environment. Sales decreased 22 percent in Latin America with weak commodity prices and inflation contributing to the drop. Asia/Pacific sales declined 8 percent primarily because of lower end-user demand for most Energy & Transportation applications.
