- The Washington Times - Tuesday, April 21, 2009

PITTSBURGH (AP) - Heavy equipment maker Caterpillar Inc. reported its first quarterly loss in 17 years on Tuesday, hurt by plunging sales and the cost of laying off thousands of workers. It also said the Obama administration should have allocated more money for roads, bridges and other public works under its stimulus plans.

The $112 million loss highlighted the depth and breadth of a global downturn, as the company suffered double-digit sales declines in most of its businesses. Caterpillar’s vast geographic reach and array of products _ including black-and-yellow bulldozers, engines for cargo ships and mining trucks that haul materials like iron ore _ make it a bellwether of the global economy.

The world’s largest maker of construction and mining equipment also said the global slowdown was worse than it predicted, despite government stimulus plans and better-than-expected commodity prices. With lending still tight and the U.S. recession tougher than expected in the first quarter, Caterpillar cut its outlook for the year.

“A great deal of uncertainty exists in the global economy, making it extremely difficult to know how our customers will respond during the remainder of 2009,” Caterpillar CEO Jim Owens said in a statement.

In the first quarter, the Peoria, Ill.-based company posted a loss of $112 million, or 19 cents per share, versus net income of $922 million, or $1.45 per share, a year earlier.

Those results included charges of 58 cents per share for layoffs. The company has announced job cuts in recent months that eventually will wipe out more than 22,000 positions, or about 19 percent of its work force.

Without those charges, Caterpillar would have earned 39 cents, handily beating Wall Street expectations of 4 cents on revenue of $8.54 billion.

Revenue at Caterpillar, a component of the Dow Jones Industrial Average, dropped 22 percent to $9.22 billion, deflated by sharply lower sales of big equipment _ the company’s largest source of revenue.

Equipment sales dropped 29 percent, led by a 46-percent decline in Europe, Africa and the Middle East. Sales in North America plunged 30 percent while Latin America fell 16 percent. However, sales in the Asia-Pacific region slipped just 2 percent.

Sales of Caterpillar engines, which power everything from ships to oil rigs, dropped 8 percent, while the company’s finance arm posted a 12-percent revenue decline.

In a conference call, Owens said the company this year will see “the most significant percentage decline in our sales since the early ‘30s.

“We modeled a worldwide recession, but not one quite as severe as we’re currently seeing,” he said.

The company also called infrastructure spending in President Barack Obama’s stimulus package “disappointing” compared with other countries, such as China, which allocated more than three times as much for public works.

The impact of the U.S. stimulus money on total construction spending will be “fairly limited,” it said. While up to $70 billion could be disbursed in 2009, that represents just 6.5 percent of last year’s total construction spending, the company said, failing to offset steep declines in private construction spending.

Owens thinks government stimulus programs around the world will help, “but it’s going to take another quarter or two.” Caterpillar generates 67 percent of it revenue overseas.

During a February visit to a Caterpillar plant, Obama said Owens had promised to rehire some laid-off workers if Congress approved the president’s stimulus bill. But Owens later said the company probably would have to lay off more workers before it could start bringing them back.

Later, Owens said he and the president “fundamentally agree” that the stimulus package will benefit the U.S. economy and spur demand for Caterpillar’s products.

For 2009, the company expects profit of about $1.25 per share on revenue of about $35 billion, down from an earlier projection of $2.50 per share on revenue of $40 billion.

The company sees U.S. demand falling more than 70 percent from a peak in 2006. China, meanwhile, will be one of the company’s strongest markets, he said.

Orders for Caterpillar’s backhoes, bulldozers and other machines plunged late last year as construction of homes and office buildings declined. Commodity prices fell, hurting firms that use its machines to mine materials such as copper.

“The headlines surrounding (Caterpillar) and its end markets could get uglier from here,” Kristine Kubacki, an analyst at Avondale Partners, wrote in a note to investors.

“We expect that even current guidance could prove to be optimistic,” she wrote.

Shares climbed 91 cents, or 3 percent, to close at $31.39 Tuesday. During the quarter, the stock price fell about 37 percent, dipping briefly to its lowest point _ $21.71 _ in about six years.

___

On the Net:

Caterpillar Inc.: https://www.cat.com/cda/layout?m8703&x7;

LOAD COMMENTS ()

 

Click to Read More

Click to Hide