Company cites ‘economic weakness’ and fourth quarter loss as main factors behind decrease
Global construction equipment heavyweight Caterpillar has announced revenues of $38.5 billion for 2016, a year-on-year fall of 18%.
The US-headquartered company also saw a 12.7% decrease in its revenues for the fourth quarter of last year. Caterpillar said its fourth quarter results included three large non-cash charges and higher-than-expected restructuring costs, which resulted in a loss for the quarter. These were also the primary reason its results were lower than the outlook it provided in October 2016, it added.
The company also announced it lost $0.11 per share in 2016, compared with a profit of $4.18 per share in 2015.
Jim Umpleby, CEO of Caterpillar, said: “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.”
Looking ahead to 2017, the company said it was seeing early indications of “modest recovery” in several areas of its businesses.
Cat’s sales in China in its construction sector began to recover slightly in 2016, while Europe achieved stability and could improve in 2017. The company added that while sales in Brazil were off their peak by over 80%, the market could improve if the Brazilian economy recovers from its recession.
The North America and EAME regions were a “concern” for the company, however. Cat said the availability of used equipment in North America could affect its sales, while overall economic weakness in EAME could lead to a fall in revenues. The guidance for the company’s revenues in 2017 was given as around $37.5bn.
“We continue to execute in a challenging economic environment and are focused on improving operating margins, profitability and shareholder returns,” said Umpleby. “While we see signs of positive activity in some of our key end markets, the overall economic environment remains challenging.”