The jobs are being cut as part of company’s latest cost reduction plan, with redundancies set to begin in towards the end of this year, aimed at minimising operating costs by $1.5bn per year.
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Caterpillar is planning another round of job cuts that could exceed 10,000 people through 2018. It says sales should be about 5 percent lower than earlier projected. If revenues also fall in 2016, that will be the first time in the company’s 90-year history of four straight revenue declines.
Read MoreCramer: What’s wrong with Caterpillar? In mid-afternoon trading Thursday, the company’s shares were trading down about 6 percent to around $66 a share.
In a statement, Caterpillar chief executive officer Doug Oberhelman acknowledged that marketplace conditions in the mining and energy sectors have been challenging.
“At the same time as that, that we’ve had to take these pretty significant actions, we have remained focused on our strategy, and that has meant improved market share”, said Potts. Non-Caterpillar analysts have said economic slowdowns in China and falling oil prices bit into the company’s sales this year. They have fallen every year since, and it’s very likely that 2016 will be our fourth consecutive year of lower sales and revenues. Vetr raised Caterpillar from a “hold” rating to a “buy” rating and set a $77.40 price objective on the stock in a research note on Tuesday, August 25th.
Mining and agricultural equipment maker Caterpillar, Inc. Since 2013, Caterpillar has closed or announced plans to close or consolidate more than 20 facilities, impacting 8 million square feet of manufacturing space. That contributed to a 21 percent drop in Caterpillar’s Asia-Pacific region sales during the second quarter.
The restructuring could impact more than 20 plants around the world across its three large businesses – construction, resources, and energy and transportation, the company said.
Caterpillar said in February that it had chose to keep its global headquarters in Peoria, about 160 miles southwest of Chicago, after considering other locations. The construction and mining equipment manufacturer also brought down its revenue forecast for this year by $1 billion. Its subsidiary companies include Caterpillar Life Insurance Company, Cat Financial and Caterpillar Product Services Corporation (NYSE:CAT), amongst others.
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The company expects to incur about $2 billion in pretax costs from the restructuring and save about $1.5 billion annually. Caterpillar has a 12-month low of $64.65 and a 12-month high of $107.12.
