Caterpillar Sales Fall Amid Weak Global Growth, Commodity Prices



Caterpillar announced Q4/15 sales and revenues of $11.0 billion, down from $14.2 billion in the fourth quarter of 2014. Full year 2015 sales and revenue of $47.0 billion was down 15% from %55.2 billion a year earlier.

The machinery maker noted this past year was a difficult one for many of the industries and customers it serves.  Sales and revenues for 2015 were nearly 15% lower than 2014 and 29% off the 2012 peak.  The two most significant reasons for the decline from 2014 were weakening economic growth and substantially lower commodity prices. The impact of weak economic growth was most pronounced in developing countries, such as China and Brazil. Lower oil prices had a substantial negative impact on the portion of Energy & Transportation that supports oil drilling and well servicing, where new order rates in 2015 were down close to 90% from 2014.

“Cost management, restructuring actions and operational execution are helping the company while sales and revenues remain under pressure from weak commodity prices and slowing economic growth in developing countries. We took tough but necessary restructuring actions in 2015 – and they were significant. I am proud that our team stayed focused on our customers in this difficult environment. Our balance sheet is strong. Our product quality remained at high levels. We gained market position for machines for the fifth year in a row. Inventory levels have declined and are well positioned as we look forward to 2016 and our safety levels are world class. We are benefiting now and expect to even more in the future when markets rebound,” said Caterpillar chairman and chief executive officer Doug Oberhelman.

“We anticipated about $5 billion of the $8 billion sales and revenues decline in our January 2015 outlook as we started the year.  Actual sales and revenues were about $3 billion below that $50 billion outlook because of steeper than expected declines in oil prices, a stronger U.S. dollar, weaker construction equipment sales and lower than expected mining-related sales in Resource Industries,” added Oberhelman.

2016 Outlook

Caterpillar said the outlook for 2016 sales and revenues does not anticipate improvement in world economic growth or commodity prices. Sales and revenues are expected to be in a range of $40 billion to $44 billion – a mid-point of $42 billion.  The mid-point of the range reflects a decline of about $3.5 billion from last October’s preliminary outlook for 2016 sales and revenues and a year-over-year decline of about 10%.  The decrease from last October’s preliminary outlook is largely a result of continued declines in commodity prices and economic weakness in developing countries.

Caterpillar noted that a further decline in oil prices is the primary reasons for the expected decline in Energy & Transportation’s 2016 sales. In addition, continuing weakness in economic conditions in much of the world is expected to be negative for sales of power generation equipment, industrial engines, marine and rail.

Sales in Resource Industries are expected to be down about 15-20% from 2015 as a result of continuing reductions in mining-related commodity prices and difficult financial conditions for many mining customers around the world.

Sales in Construction Industries are expected to decline about 5-10% from 2015. In the U.S., improving labor market conditions and relatively stable economic growth should continue to support the wider economy and construction. However, Caterpillar expects weakness in developing countries and lower activity in oil- producing regions to persist.


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