Caterpillar Inc. posted its first quarterly net loss since 1992 on Tuesday mainly due to lower sales caused by the economic crisis and a huge amount of layoff costs.
In its first quarter financial report of 2009, the manufacturing giant saw a loss of 112 million dollars in the first three months, down 1.034 billion dollars from a 922-million-dollarprofit in the first quarter of 2008.
It means the company lost 19 cents per share in the first quarter, down 1.64 U.S. dollars per share comparing with the same period of last year. The sharp decrease was largely a result of lower sales and revenues and a huge amount of redundancy costs of job cuts.
Caterpillar emphasized in the report that excluding redundancy costs, its first quarter profit was 39 cents per share. Redundancy costs related to reducing employment were 558 million dollars before tax or 58 cents per share in the quarter. Sales and revenues were 9.225 billion dollars, down 22 percent from 11.796 billion dollars in the first quarter of last year.
Workers walk out of the Caterpillar plant in Peoria, Illinois Jan. 26, 2009. (Xinhua/Reuters Photo)
According to the report, since late 2008, Caterpillar has taken a variety of steps to reduce workforce, including cutting full-time employment by about 10,000 and flexible workforce by about 15,000.
"These results demonstrate significant reduction in our cost structure as a result of swift deployment of the economic trough strategy we introduced in 2005," said Chairman and Chief Executive Officer Jim Owens.
The company updated its outlook for 2009 as a result of weaker economic conditions, expecting 2009 sales and revenues to be in a range of plus or minus 10 percent around a midpoint of 35 billion dollars.
Although Caterpillar indicated that the big uncertainty in the global economy, the timing and impact of stimulus measures and the extent of dealer inventory reductions make it very difficult to forecast sales and revenues, the company still expects to be profitable in 2009, anticipating the midpoint profit of about 1.25dollars per share excluding redundancy costs and 50 cents per share including these costs. Source: Xinhua