- Equipment giant Caterpillar exceeded its second-quarter profit and sales forecasts, but the company alerted investors to the likelihood that it will continue to lose ground through 2016 and could be forced to lay off more employees, according to The Wall Street Journal.
- Caterpillar's sales were down 17% from Q2 2015, driven by a 29% plunge in its mining business — with its machinery and engines operating profit taking a 44% hit.
- The company said low oil and mined commodity prices combined with a decline in worldwide demand and the instability caused by international events — including Brexit, the U.S. presidential election, and the coup attempt in Turkey — are all constraining its growth.
During an investor conference call, Caterpillar officials pointed to the growing U.S. housing and infrastructure industries as positive factors but said dealers, who are grappling with too-high equipment inventories, are under severe pricing pressure and are making little profit in a discount environment. The company has cut costs in an effort to mitigate a continued decrease in sales, but its $670 million in savings were erased by $700 million in downsizing expenses.
Caterpillar did not specify many more employees it will lay off, but it is in addition to the 10,000 positions and 20 facilities it plans to eliminate by the end of 2018. In May, the company also announced it would close five of its U.S. manufacturing plants in North Carolina, South Carolina, Florida and Mississippi by late 2017. The closings are part of a $1.5 billion cost reduction plan unveiled in September, which will also delay company plans to build a new headquarters in Peoria, IL.
In May, Caterpillar executives traveled to Cuba in an effort to position the company for growth in the event the existing trade embargo between the two nations is lifted. Some see this as a foregone conclusion after the 2014 reinstatement of diplomatic relations between the U.S. and Cuba. In another unconventional marketing move last year, the company launched a social media campaign featuring its latest piece of equipment in a rap video, which ended up going viral. To date, the video has had more than 439,000 views on YouTube. Caterpillar has diversified into construction startups as well, and one major recipient of its investments, Uptake Technologies, was named Forbes' hottest startup of 2015.