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.
