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Caterpillar full-year and 4Q16 results down compared to 2015

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World Coal,

Caterpillar’s sales and revenues in 4Q16 were US$9.6 billion, down from US$11 billion in the fourth quarter of 2015. Full-year sales and revenues in 2016 were reported at US$38.5 billion, down approximately 18% from US$47 billion in 2015.

“Our results for the fourth quarter, while slightly better than expected, continued to reflect pressure in many of our end markets from weak economic conditions around much of the world. Our team did a great job in the quarter, as they have all year, aligning our cost structure with current demand while preserving capacity for the future. I’m confident we are focusing on the right areas: controlling costs, maintaining a strong balance sheet and investing in the key areas important to our future,” said Caterpillar Chief Executive Officer Jim Umpleby.

Period costs and variable manufacturing costs were US$2.3 billion lower in 2016 – restructuring and cost reduction actions and lower incentive pay helped mitigate the impact of lower sales.

Restructuring costs and three large non-cash items in the fourth quarter impacted profit substantially, and are reported to have resulted in a loss for the quarter and the year.

Machinery, Engines & Transportation operating cash flow was US$3.9 billion in 2016, which Caterpillar indicated was more than sufficient to cover capital expenditures and dividends.

Cat reported that it is seeing positive signs, which could be early indications of modest recovery in several of our businesses. Resource Industries: Commodity prices at higher levels than a year ago, along with sequential improvements in parts sales in each of the last three quarters and improvements in quoting and order activity in the fourth quarter, suggest that mining-related sales may have bottomed.

Resource Industries: While quoting interest in mining products has improved, the company expects miners’ capital spending to be about flat in 2017 after several years of decline. Sales of some large construction equipment within Resource Industries are likely to be down in 2017, compared with 2016.


2017 Outlook


Caterpillar’s expectations for 2017 are similar to those shared with investors in early December 2016. At that time, it believed the analyst consensus for 2017 sales and revenues of about US$38 billion was a reasonable midpoint expectation. The company’s expectation for sales and revenues in 2017 is now slightly lower due to the strengthening of the US dollar over the past two months, and as a result, its current outlook for sales and revenues in 2017 is a range of US$36 billion to US$39 billion with a midpoint of US$37.5 billion.

“We continue to execute in a challenging economic environment and are focused on improving operating margins, profitability and shareholder returns. While we see signs of positive activity in some of our key end markets, the overall economic environment remains challenging,” added Umpleby.

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