The company explains that it intends to “revamp its mining business, as well as the company’s dealer and customer-facing divisions as part of the efforts to lower costs”.
Advertisement
The company will offer a voluntary retirement enhancement program for qualifying employees, which will be completed by the end of 2015. The company will also cut costs by lowering manufacturing costs through consolidating and closing facilities. The primary factors that have impacted our rating are mixed – some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks.
Caterpillar said it would cut 4000 to 5000 jobs by the end of next year, majority coming this year.
Chairman and CEO Doug Oberhelman wrote Thursday in a guest column for the Peoria Journal-Star that plans for the new headquarters “still stand, although given current conditions we can’t say when the project will begin”. The company also said revenue is expected to be down about 5% from in 2015 levels next year.
It will be first time in the company’s 90 year history that sales revenues have fallen for four years in a row.
The restructuring, at over 20 plants worldwide across its energy and transportation, construction and resources businesses, would entail a pretax cost of about $2bn.
Today’s announcement is in addition to significant actions Caterpillar has already taken. “Employees will be notified as decisions are made for each facility”, it added.
Shares in Caterpillar, one of the blue-chip stocks in the Dow Jones industrial average, were down six percent as the trading day ended, according to The New York Times.
“Obviously this affects us, our business and our workers”, he said, declining to provide details. “That’s enabled $8.2 billion (€7.37 billion) of share repurchases over the past three years”. It said that would not repeat in 2016.
“When they finally went negative in energy, they said ‘We have to bite the bullet, ‘” Ubelhart said in an interview Thursday. Caterpillar itself acknowledged in 2013 that a non USA subsidiary distributes the company’s products to independent dealers outside the United States; and that the subsidiary routinely enters into advance purchase agreements with manufacturers including Caterpillar. The company blamed the cuts on China’s economic slowdown and falling oil prices.
Advertisement
The moves are a response to weakness in the mining and energy sectors, two of Caterpillar’s core areas.
