Facing continued downturns in the oil, gas and mining industries coupled with sluggish economic conditions in developing countries, sales and revenues fell to $12.3 billion while operating profit dropped 41 percent to $785 million.
Cat chairman and CEO Doug Oberhelman says he is pleased with the company’s performance in the face of challenging conditions and says the company’s cost-cutting efforts, which have closed or combined several manufacturing facilities and cut 11,200 full-time and 2,700 part-time employees from the company’s workforce in the last year, is having its desired effect.
“Our goal when sales decrease is to lower costs so the decline in operating profit is no more than 25 to 30 percent of the decline in sales and revenues,” says Oberhelman. “For the quarter, our decremental operating profit pull through was better than our target range.”
Cat has lowered its outlook for 2016 a second time, dropping its expectation for total sales to between $40 billion and $40.5 billion. The company’s previous outlook, released with its Q1 financial report, called for sales to fall between $40 billion and $42 billion.
The company says expected restructuring costs for 2016 have risen from $550 million to $700 million, mainly due to additional workforce reductions to be made in the second half of this year.
With this outlook, Cat is facing an unprecedented fourth consecutive down year.
