Caterpillar reports ‘rough’ 2015 with weak sales growth, 4Q loss of $87 million

Caterpillar Inc. on Thursday (Jan. 28) reported that its fourth-quarter and yearly sales saw double-digit declines in 2015, and also revised the company’s already tepid 2016 forecast with a warning that slow global growth and low commodity prices will further cut the industrial and farming giant’s bottom line.

For the period ended Dec. 31, 2015, the industrial and agricultural manufacturing giant reported a fourth quarter loss of $87 million, or 15 cents per share, compared to a profit of $757 million, or $1.23 per share a year ago. Revenues in the quarter slid 22.5% to $11 billion, down from $14.2 billion a year ago.

Excluding restructuring costs, the company’s saw a profit of 74 cents per share, compared with $1.35 per share in the fourth quarter of 2014. That easily beat Wall Street expectations of 69 cents per share on sales of $11.4 billion, according to Thomson Reuters.

For the full year, Caterpillar reported earnings of $2.1 billion, or $3.50 per share, down 43% from $3.7 billion, or $5.88 per share a year ago. Revenues for 2015 came in at $47 billion, a decline of 14.7% compared to $55.1 billion in 2014.

In explaining the disappointing fourth quarter earnings and yearly sales numbers, Caterpillar Chairman CEO Doug Overhelman said revenues for the farming and manufacturing giant in 2015 were nearly 15% lower than 2014 and 29% off the 2012 peak of $69.2 billion.

OFFICIALS STILL MUM ON NLR PLANT
According to Overhelman, Caterpillar took substantial “additional restructuring actions” in 2015 to lower the company’s cost structure. As a result, restructuring costs of $908 million were higher than anticipated at the beginning of the year.

In late September, Caterpillar first announced a major across-the-board restructuring and cost reduction that would touch more than 10,000 employees across the company’s expansive U.S. and international operations. At the time, there was no word given on the company motor grade plant in North Little Rock that Caterpillar opened in January 2009.

During a trip to the city in late 2011, Overhelman said there were about 900 workers at the central Arkansas plant and mentioned possible plans to expand the facility in the future. To date, however, the Fortune 100 industrial giant has yet to announce additional expansion to its North Little Rock workforce since work at the motor grader plant began seven years ago.

In fact, although Caterpillar and North Little Rock chamber officials refused to provide an official employee count at the motor grader plant, Overhelman revealed during his visit to the city that operations at the plant were not at full capacity and have never come close to the 1,500 worker-level touted by economic development officials.

2016 OUTLOOK
Concerning the company’s 2016 outlook, the Caterpillar chief executive said he does foresee improvement in sales and revenues due to a slowdown in world economic growth and global commodity prices. Sales and revenues are now expected to be in a range of $40 to $44 billion, which is about $3.5 billion blow the company’s earlier forecast in October and reflects a 10% year-over-year decline.

“Our outlook reflects struggling oil and other commodity markets, and continued economic weakness in developing countries. While the U.S. and European economies are showing signs of stability, the global economy remains under pressure,” Overhelman said. “While we manage through these difficult economic times with substantial restructuring actions to lower costs, we are also preparing for the long term.”

Caterpillar shares (NYSE: CAT) closed Thursday at $61.08, up $2.76. During the past 52 weeks the share price has ranged from an $89.62 high to a $56.36 low.