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Caterpillar 4Q16 and FY16 results

Published by , Assistant Editor
World Cement,

Caterpillar Inc has announced its 4Q16 and FY16 results.

Sales and revenues in 4Q16 were US$9.6 billion, down from US$11.0 billion in 4Q15. 4Q16 was a loss of US$2.00 per share, compared with a loss of US$0.16 per share in 4Q15.

Full-year sales and revenues in 2016 were US$38.5 billion, down about 18% from US$47.0 billion in 2015. The company lost US$0.11 per share in 2016, compared with a profit of US$4.18 per share in 2015.

4Q16 results included three large non-cash charges and higher than expected restructuring costs. These items resulted in a loss for the quarter and were the primary reason the results were lower than the outlook provided in October 2016.

Adjusted profit per share in 4Q16 was $0.83, the same as 4Q15, but higher than the outlook for profit per share excluding restructuring costs provided in October 2016. Adjusted profit per share in 2016 was US$3.42, down from US$5.35 per share in 2015. For the year, the impact on profit from lower sales and revenues was mitigated by a US$2.3 billion reduction in period costs and variable manufacturing costs.

“Our results for the fourth quarter, while slightly better than expected, continued to reflect pressure in many of our end markets from weak economic conditions around much of the world. Our team did a great job in the quarter, as they have all year, aligning our cost structure with current demand while preserving capacity for the future. I’m confident we are focusing on the right areas: controlling costs, maintaining a strong balance sheet and investing in the key areas important to our future,” said Caterpillar Chief Executive Officer Jim Umpleby.

Expectations for 2017 are similar to those shared with investors in early December 2016. At that time, Caterpillar believed the analyst consensus for 2017 sales and revenues of about US$38 billion was a reasonable midpoint expectation. The company’s expectation for sales and revenues in 2017 are now slightly lower due to the strengthening of the US dollar over the past two months, and as a result, the current outlook for sales and revenues in 2017 is a range of US$36 billion to US$39 billion with a midpoint of US$37.5 billion.

Caterpillar expects profit per share of about US$2.30 at the midpoint of the sales and revenues outlook range. Excluding restructuring costs of about US$500 million, adjusted profit is expected to be about US$2.90 per share at the midpoint, which reflects decremental operating profit pull through of about 30% from 2016.

“We continue to execute in a challenging economic environment and are focused on improving operating margins, profitability and shareholder returns. While we see signs of positive activity in some of our key end markets, the overall economic environment remains challenging,” added Umpleby.

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