Cat counts the cost of recession
Caterpillar has announced a 75% drop in profit for 2009 on sales and revenue 37% lower at £20bn, down from £31.6bn in 2008. Profit for the year was £552m (compared with £2.2bn in 2008) but was over £840m if redundancy costs are excluded.
Caterpillar chairman and chief executive officer Jim Owens said: "While the economy in 2009 was the worst our company has experienced since the Great Depression ... we delivered solid profitability and cash flow and dramatically improved our balance sheet."
During 2009 Caterpillar cut its worldwide workforce by more than 19,000 to end the year with almost 94,000 employees. However, Owens had some good news for the workforce: "We do not expect significant redundancy costs in 2010," he said.
Despite a lack of any dramatic improvement in fourth quarter trading (sales down 39% and profit off by 67%), Caterpillar is predicting 2010 sales and revenues will improve by between 10% and 25%. It highlights economic improvements in developing economies like China and (to a lesser degree) in North America, Europe and Japan, and a marked increase in demand for mining equipment due to strong commodity prices.
In addition, Caterpillar sees improved sales of aftermarket service parts, which it said is usually an early indicator of growing demand. It also believes its dealers have finished reducing their inventories - which had prevented nearly £2.5bn of customer demand feeding back to manufacturing orders in 2009.
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