Dive Brief:
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Construction equipment giant Caterpillar reported revenues of $9.2 billion during the third quarter, missing analyst predictions by $600 million and down from $10.9 billion a year ago, according to Reuters. The company posted a $283 million profit, compared to $559 million in the third quarter of 2015.
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Earnings per share were 85 cents, 9 cents higher than Wall Street predictions. Parts sales and mining-truck rebuilds increased slightly.
- With little reason to hope for a significant turnaround before the end of the year, Caterpillar trimmed its 2016 revenue estimates to $39 billion, down from $40 billion to $40.5 billion. The company dropped its 2016 profits estimate to $3.25 per share from $3.55 previously.
Dive Insight:
Caterpillar instituted a $1.5 billion cost-cutting plan last year, which entailed laying off up to 10,000 workers and closing or consolidating plants, a savings effort set for completion by 2018. It has also shelved plans to build a new headquarters in Peoria, IL. In September, the company announced that it would lay off thousands of overseas workers and close a Mossville, IL, plant that employs 300 people.
The company's most recent change, however, was the retirement announcement from Chairman and CEO Doug Oberhelman earlier this month. His 40-year career with the company, which included leading its global expansion, will end at the close of 2016. Jim Umpleby will step in as CEO at that time, and Dave Calhoun will come on as chairman sometime next year. As part of the executive shuffle, Caterpillar also announced, to the satisfaction of investors, that a single person would no longer be allowed to assume the roles of CEO and chairman at the same time.
Economists often look to Caterpillar's performance as a bellwether of future growth in a variety of markets, including construction, resource extraction and more. The company has attributed its declining results to dwindling demand in the energy and construction/extraction industries across the globe.