Caterpillar Responds to Sharp Volume Decline First-Quarter Loss
Sponsored LinksCaterpillar Inc.today reported a loss of $0.19 per share, down $1.64 per share from the first quarter of 2008. Excluding redundancy costs, first quarter profit was $0.39 per share. Redundancy costs related to reducing employment were $558 million before tax or $0.58 per share in the quarter. Sales and revenues were $9.225 billion, down 22 percent from $11.796 billion in the first quarter 2008.
“These results demonstrate significant reduction in our cost structure as a result of swift deployment of the economic trough strategy we introduced in 2005. I’m proud of Team Caterpillar’s response to these challenging economic conditions,” said Chairman and Chief Executive Officer Jim Owens. “Our business units are making the tough decisions necessary to respond to this widespread and sharp global recession. By taking aggressive and decisive actions now, we’re positioning the company not only for success in the short-term, but to be even more competitive in the long-term when the global economy recovers. We were also pleased with the improvement in price realization during the quarter. It’s a testament to the value customers place on our products,” Owens added.
“In addition to cost control, we’re very focused on maintaining our financial strength. We expect to lower inventory by about $3 billion in 2009 and reduced it by $789 million in the first quarter. Inventory management is a key element of the Caterpillar Production System using 6 Sigma, and we are pleased with the traction we’re gaining. In this environment liquidity is a major focus, and as a result we’ve decided to hold more cash than usual. While we do not anticipate the need to issue additional term debt during the remainder of the year, we may do so to maintain our liquidity position. Maintaining Caterpillar’s financial strength through these very difficult times will allow us to emerge a stronger company,” Owens said.
The first-quarter loss of $112 million was down $1.034 billion from a $922 million profit in the first quarter of 2008. The decrease was largely a result of lower sales and revenues and $558 million of redundancy costs.
“This is an extremely difficult time for employees affected by this severe economic downturn, and providing them with financial assistance and transitional support is important. While redundancy costs have been a considerable expense, it’s the right thing to do for our people,” Owens said.
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