Caterpillar Inc., the world’s largest maker of construction and mining equipment, on Tuesday reported a first-quarter loss of $112 million, hurt by sharp sales declines across the globe and a big charge for recent layoffs.
The loss was Caterpillar’s first since 1992 and highlighted the depth and breadth of a global downturn that forced double-digit sales drops in most of Caterpillar’s product lines. Caterpillar’s vast geographic reach and array of products — including machines used to build roads and bridges, engines that power oceangoing freighters and mining trucks that haul materials like iron ore — make it a bellwether of the world economy.
The company also said the economic climate has deteriorated, 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 lowered its outlook.
“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,” said Caterpillar CEO Jim Owens. “One thing is clear, (we) will remain focused on containing costs.”
In the first quarter, Caterpillar posted a loss of $112 million, or 19 cents per share, including charges for layoffs that lowered per-share results by 58 cents. A year earlier, the company earned $922 million, or $1.45 per share.
Before the charges, Caterpillar would have earned 39 cents per share, handily beating Wall Street expectations of 4 cents on revenue of $8.54 billion, according to a survey by Thomson Reuters.
In response to sinking demand, the Peoria, Ill., company has announced dramatic cost-cutting measures in recent months, including job cuts that eventually will wipe out more than 22,000 positions and idle assembly lines. The company employed nearly 113,000 people at the end of 2008.
Caterpillar, a component of the Dow Jones Industrial Average, said quarterly revenue dropped 22 percent to $9.22 billion.
The company also cut its 2009 profit forecast. It now 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 new forecast also was below what Wall Street expected — a profit of $1.77 per share on revenue of $39.04 billion.
Excluded from those figures are more charges for layoffs, which Caterpillar expects to reach about 75 cents per share in 2009.
The company projected steeper declines in the North American machinery industry, a lower volume of mining products and large engines, and a drop in dealer inventories.
In a note to investors, Kristine Kubacki, an analyst at Avondale Partners, wrote that “the headlines surrounding (Caterpillar) and its end markets could get uglier from here.”
“We expect that even current guidance could prove to be optimistic as end markets deteriorate further,” she wrote.
Sales of Caterpillar’s big equipment — the company’s largest source of revenue — dropped 29 percent during the first quarter, led by a 46 percent decline in Europe, Africa and the Middle East. Sales in North America plunged 30 percent while Latin America sales fell 16 percent. Machinery sales in the Asia-Pacific region slipped just 2 percent.
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 yellow-and-black machines to mine materials such as copper. Analysts say demand may not return for months.
Shares of Caterpillar slid $1.13, or 3.7 percent, to $29.41 in early trading Tuesday. During the quarter, Caterpillar shares fell about 37 percent, dipping briefly to their lowest point — $21.71 per share — in about six years.
Copyright 2009 The Associated Press.