PEORIA, IL — Caterpillar Inc. reported diminished sales and profit for the third quarter of 2016, once again reducing its annual revenue projection and increasing restructuring costs.

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The company additionally claimed in its third quarter earnings report that it expected sales and revenue in 2017 to remain about the same as this year, with better results expected for the last half of 2017 rather than during the first six months.

Caterpillar on Tuesday announced a third-quarter profit per share of 48 cents, down from 94 cents for the third quarter of 2015. Excluding restructuring costs, profit per share was 85 cents, a decline of 20 cents from a year ago.

Third quarter sales and revenue slid 16 percent to $9.2 billion in 2016 from $11 billion in 2015. The revenue projection for the year decreased to $39 billion, down from an estimated $40 billion to $40.5 billion at the time the second quarter earnings report was released three months ago.

“It’s in a lot of ways a continuation of the last few quarters,” said Mike DeWalt, vice president with responsibility for the Financial Services Division. “A lot of our businesses are so beat up right now that there’s a limited downside.”

The construction equipment market in North America in particular showed signs of softening in the third quarter, with an abundance of used equipment usurping sales of new machinery, according to the company.

Caterpillar Chairman and CEO Doug Oberhelman, who last week announced his retirement effective at the end of March next year, noted positive trends elsewhere in the world.

“Both the construction industry and our machine market position improved in China,” Oberhelman said in the report. “Most commodity prices, while low, seem to have stabilized. Parts sales have increased sequentially in each of the last two quarters.”

The company also increased its projected restructuring costs for 2016 to $800 million from $700 million at the end of the second quarter. The second-quarter figure represented a $150 million upward adjustment from previous estimates and signaled additional layoffs beyond the thousands announced as part of a major restructuring plan implemented in the fall of 2015.

The earnings report released Tuesday indicated Caterpillar had 14,100 fewer full-time and flexible workforce employees at the end of September than at the same time last year, for a total employment figure of 108,800 people around the world.

In the last year, far more full-time than flexible positions were cut — 11,800 full-time employees verses 2,300 flexible workforce employees — and more positions were eliminated in the United States than elsewhere — 8,600 jobs lost among the U.S. workforce verses 5,500 non-U.S. workforce positions.

The report also noted that all significant actions included in the September 2015 restructuring announcement have been made public. Those changes and the unfolding evolution of the restructuring plan also resulted in the closure, consolidation or contemplated closure of nearly 30 facilities around the world, eliminating more than 11 percent of the company’s manufacturing square footage.

DeWalt said the restructuring cost adjustment in the third quarter, however, was not tied to new plant closures or layoffs. The increased restructuring cost instead was due primarily to asset write-downs recognized in the third quarter, such as the previously announced decision to discontinue some segments of underground mining equipment production.

The decisions to adjust the company’s cost structure and change processes to improve efficiency have maintained profitability through a downturn in the industries responsible for Caterpillar equipment sales, DeWalt added.

“That’s preserving the company for better times,” DeWalt said.

Matt Buedel can be reached at 686-3154 or [email protected]. Follow him on Twitter @JournoBuedel.


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