Mining slump ravages Caterpillar earnings

AFP - The global mining slump and widespread downturns in construction took a severe toll on heavy equipment supplier Caterpillar’s first quarter earnings, the company reported yesterday. With little sign of a turnaround in the key industries it supplies, the US company lowered its forecasts for the full year of 2016, saying it has to focus mainly on keeping costs down and defending its share of the global market. Peoria, Illinois-based Caterpillar said global sales and revenues fell 25.5 percent to $9.46 billion in the January-March quarter, with declines across all of its four regions.

The company was able to cut operating costs by 18.5 percent to hold down the damage to net profits, which came in at $271 million (46 cents per share), down from $1.25 billion a year ago. Sales were down in all four of the company’s geographical regions, with Latin America the worst-hit, percentage-wise, and all of its major industry lines: construction, oil and gas, mining and rail. Chairman and chief executive officer Doug Oberhelman said in a statement that recent upticks in key commodity prices and some pickup in construction in China were positive signs. But he said Caterpillar was still cutting its 2016 sales and revenues forecasts by about 2 percent, with the midpoint of the range dropping to $41 billion from $42 billion previously.

“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,” he said in a statement. Caterpillar shares were down 1.6 percent to $77.43 in pre-market trade after the earnings results were announced.