Caterpillar Cuts Jobs, Revenue Outlook -- 2nd Update
September 24 2015 - 10:28AM
Dow Jones News
By Tess Stynes
Caterpillar Inc. projected further revenue declines and
announced plans to cut more than 10,000 jobs over the next three
years as the maker of engines and heavy equipment continues to feel
the impact from weakness in the energy and construction
markets.
The Peoria, Ill.-based company said the job cuts would occur
through a reduction in its salaried and management staff and,
longer term, through contemplated plant consolidations and
closures. Caterpillar is aiming to reduce annual costs by roughly
$1.5 billion a year.
Caterpillar also reduced its 2015 revenue view by $1 billion to
about $48 billion, marking the third-straight year that its revenue
has fallen. The company added that it sees its 2016 revenue falling
5% from 2015, which would be the first time in Caterpillar's
90-year history that revenue has decreased four years in a row.
Caterpillar said sales would decline across its main businesses
next year, but that its oil-and-gas segment--which has been hurt by
weak commodities prices--would see the most significant
decline.
Analysts, on average, were expecting revenue of $48.8 billion in
2015 and $47.36 billion in 2016.
Shares of Caterpillar, which have fallen 31% over the past 12
months, fell 6.7% to $65.53 in morning trading.
The planned job cuts include reductions of between 4,000 and
5,000 salaried and management staff through 2016 but mostly this
year. The potential plant consolidations and closings could affect
more than 20 of its operations and slightly more than 10% of its
factory floor space.
Caterpillar said that since 2013, it has closed or announced
plans to close or consolidate more than 20 facilities, impacting 8
million square feet of manufacturing space. In addition, the
company already has reduced its total workforce by more than 31,000
since mid-2012.
The company said its restructuring effort is expected to lead to
pretax costs of roughly $2 billion but that it expects to see half
of the projected $1.5 billion in cost savings from the
restructuring next year.
The company plans to provide an update of its 2015 outlook when
it releases its third-quarter results in late October.
Caterpillar also said it would revamp its mining business, as
well as the company's dealer and customer-facing divisions as part
of the efforts to lower costs.
Write to Tess Stynes at tess.stynes@wsj.com
Subscribe to WSJ: http://online.wsj.com?mod=djnwires
(END) Dow Jones Newswires
September 24, 2015 10:13 ET (14:13 GMT)
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