Caterpillar’s Resource Industries Group broke even in 2Q15 – down from a profit of US$114 million last year – on the back of lower sales volumes, the company said in its quarterly earnings report.
Sales were US$1.991 billion over the quarter, down US$250 million or 11% on the same period in 2014, on lower demand for both new equipment and aftermarket parts and the unfavourable impact of currency – particularly the euro.
“We believe some companies are continuing to delay maintenance and rebuild activities,” the company said.
“Commodity prices remained weak and mining customers continued to focus on improving productivity in existing mines and reducing their total capital expenditures, as they have for the last several quarters,” the company continued. “As a result, sales and new orders in Resource Industries continued to be weak.”
Overall, the company announced quarterly profit of US$710 million – down from US$999 million last year - on sales and revenues of US$12.3 billion. The company also warned that sales and revenues for the year would be about US$49 billion – a billion dollars less than previously announced.
"We originally set the US$50 billion sales and revenues estimate in January and our expectations haven't changed much since then. However, currency impacts from a stronger US dollar are causing sales in many countries to translate into fewer dollars than we initially expected," said Caterpillar’s CEO, Doug Oberhelman.
"While economic conditions in the US are modestly positive, the global economy remains relatively stagnant,” continued Oberhelman. “Many of the key industries we serve remain weak, and we haven't seen sustained signs of improvement. Continuing economic weakness in China and Brazil, as well as uncertainty in the eurozone and over Greece, haven't helped confidence. Prices for commodities like coal, iron ore and oil are not signalling an improvement in the short term. We are committed to controlling costs as we manage through this downturn and that will position Caterpillar for better results when conditions improve."
Written by Jonathan Rowland.
Read the article online at: https://www.worldcoal.com/mining/23072015/caterpillar-resource-industries-breaks-even-in-2q15-2619/