Caterpillar, Inc. (IW 500/24), announced Tuesday that it planned additional job cuts in the second half of 2016 as sluggish conditions in energy and mining weighed on second-quarter earnings.
Caterpillar, which manufactures industrial equipment for energy, mining and construction companies, said it expects higher costs due to restructuring and job cuts as it cited global economic uncertainty due in part to political upheaval in Turkey and Britain.
“Despite a solid second quarter, we’re cautious as we enter the second half of the year,” CEO Doug Oberhelman said. “We’re not expecting an upturn in important industries like mining, oil and gas and rail to happen this year.”
Net income fell 31% to $550 million, while revenue fell 16% to $10.3 billion. Sales dropped in all three of Caterpillar’s industrial businesses. Caterpillar acknowledged that oil prices have risen in 2016, but said the jump has not sparked major new investment.
“We do not see the current price driving significant increase in demand for our products in 2016,” it said.
Caterpillar signaled that its 2016 sales would come in at the lower end of its range. Caterpillar also projected that full-year profits would be $2.75 per share, down from $3.00 previously, due to higher restructuring costs.
Caterpillar has already cut thousands of jobs due to the slowdown in its businesses. Headcount at the end of the quarter was 100,0000, down about 10% from the year-ago period.
Shares of Caterpillar rose 0.3% to $78.95 a share.
Copyright Agence France-Presse, 2016