Caterpillar mining business announces loss

Caterpillar has announced 3Q16 sales and revenues of US$11 billion, dropping from US$13.5 billion in 3Q14 and resulting in a fall in operating profit of US$679 million to US$713 million. The Resource Industries business segment continued to suffer from weak demand for capital equipment in the mining sector, suffering a quarterly loss of US68 million on sales of US$1.796 billion.

“The environment remains extremely challenging for most of the key industries we serve with sales and revenues down 19% from the third quarter last year,” said Caterpillar Chairman and CEO, Doug Oberhleman.

The full-year outlook for sales and revenues remains at about US$48 billion, the company said. This was unchanged from the outlook included with September announcement of new restructuring actions, which will see the company reduce its workforce by 10 000 and close up to 20 manufacturing facilities by 2018 in an effort to save US$1.5 billion per year in operating costs.

The new restructuring plan comes at a cost, however, with the company saying restructuring costs would rise significantly this year

As a result of these additional restructuring actions, the company expects its costs incurred has risen significantly from an original estimate of US$250 million to US$800 million. This has reduced the forecast full-year profit per share to US$3.70 from US$4.60.

“Improving how we operate if our focus amidst the continued weakness in mining and oil and gas,” continued Oberhleman.

Looking ahead to 2016 and Caterpillar expects business conditions in the mining sector to continue to worsen, resulting in a fall in its Resource Industries’ sales of about 10%. Overall, the company expects sales and revenues to be about 5% down on 2015.

“Managing through cyclicality has been critical to Caterpillar’s success for the past 90 yr,” said Oberhelman. “It’s nothing new for us or our customers”

“When world growth improves, the key industries we serve – construction, mining, energy and rail – will be needed to support that growth. We’re confident in the long-term success of the industries we’re in and, together with our customers, we’ll weather today’s challenging market conditions.”

Edited by Jonathan Rowland.

Read the article online at: https://www.worldcoal.com/mining/22102015/caterpillar-mining-business-announces-quarterly-loss-3198/