Caterpillar has reported a 15% decline in global revenues for 2015 and a 40% fall in profits.
Caterpillar Inc made revenues of US$47.0bn (£32bn) in 2015, down from $55.2bn the previous year. Profit per share fell from $5.88 in 2014 to $3.50 for 2015.
Total profits fell from $3.7bn for 2014 to $2.1bn for 2015.
The two most significant reasons for the decline were weakening economic growth and substantially lower commodity prices. Caterpillar was particularly hit by the slowdown in previously booming Brazil and China.
Faced with the fall in sales, Caterpillar spent $908m on restructuring the business in 2015, which was a major cause of the hit on profits.
Chairman and chief executive Doug Oberhelman said: “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.”
No improvement is expected in 2016. The company expects its sales and revenues to be in a range of $40bn to $44bn. Sales in construction industries are expected to decline about 5 to 10 percent from 2015. In the United States, improving labour market conditions and relatively stable economic growth should continue to support the wider economy and construction, Caterpillar said. However, it expects continuing weakness in developing countries and lower activity in oil-producing regions.
Mr Oberhelman concluded: “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. While we manage through these difficult economic times with substantial restructuring actions to lower costs, we are also preparing for the long term. We are continuing substantial investments in R&D and our digital capabilities. These investments will be positive for Caterpillar and our customers through connected fleets and jobsites and access to data and predictive analytics. Investing in the future is important to improving productivity and the bottom line – for Caterpillar and our customers over the long term. While it is tough to predict when an economic recovery will happen, the investments we are making and the actions we are taking to lower our cost structure and improve quality and our market position will help deliver better results when a recovery comes.”