Caterpillar Inc. today announced profit per share of $0.93 for the second quarter of 2016, a decrease from $1.31 per share in the second quarter of 2015. Excluding restructuring costs, profit per share was $1.09, down from $1.40 per share in the second quarter of 2015. Second-quarter 2016 sales and revenues were $10.3 billion, down from $12.3 billion, or 16%, in the second quarter of 2015.
“I’m pleased with our financial performance and focus on our long-term strategy given the difficult economic and industry environment we’re facing. Our goal when sales decrease is to lower costs so the decline in operating profit is no more than 25 to 30% of the decline in sales and revenues. For the quarter, our decremental operating profit pull through was better than our target range. Together with our dealers, we’re having success managing through the downturn in industries like mining and oil and gas, and in sluggish economic conditions in much of the developing world. In what is likely to be our fourth down year for sales and revenues, we’re proud of what we’re accomplishing – our machine market position has increased, including in China, product quality continues to be at high levels, and the safety in our facilities is world class,” said Caterpillar Chairman and Chief Executive Officer Doug Oberhelman.
World economic growth remains subdued. Commodity prices appear to have stabilized, but at low levels. Global uncertainty continues, and the recent Brexit outcome and the turmoil in Turkey add to risks, especially in Europe.
The outlook for 2016 Caterpillar provided with its first-quarter financial results in April expected sales and revenues in a range of $40 billion to $42 billion. At the midpoint of that range, profit was expected to be $3 per share, or $3.70 per share excluding restructuring costs. Over the past quarter, economic risks have persisted and, as a result, current expectations for 2016 sales and revenues are closer to the bottom end of that outlook range.
Restructuring costs in 2016, which were expected to be about $550 million, are now forecast to be about $700 million, or about $0.80 per share. Additional workforce reductions expected in the second half of 2016 are the primary reason for the increase in restructuring costs. Sales and revenues for 2016 are expected to be in a range of $40.0 billion to $40.5 billion, and the profit outlook at the midpoint of the sales and revenues range is about $2.75 per share, or about $3.55 per share excluding restructuring costs.
Caterpillar is cutting more jobs. The company, based in Peoria, Illinois, is being impacted by strong dollar. - The Wall Street Journal
Caterpillar lowered its forecast for 2016 sales and earnings for the second time in three months. - Bloomberg
Caterpillar's second quarter results top analysts' expectations. - U.S. News and World Report