Caterpillar expects tough 2015, restructuring anticipated

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World’s leading manufacturer of construction and mining equipment Caterpillar has said it expects a tough 2015 as a result of the modest improvement anticipated globally as well as the continued weakness in commodity prices—particularly oil, copper, coal and iron ore as to which the company depends on for its sales.

The company adds to undertake restructuring actions  that will cost the company about $150 million above the restructuring it has undertaken over the past two years designed to lower our long-term cost structure.

According to Caterpillar Chairman and Chief Executive Officer Doug Oberhelman the recent dramatic decline in the price of oil is the most significant reason for the year-over-year decline in our sales and revenues outlook.

“Current oil prices are a significant headwind for Energy & Transportation and negative for our construction business in the oil producing regions of the world.  In addition, with lower prices for copper, coal and iron ore, we’ve reduced our expectations for sales of mining equipment,” Oberhelman said.

Caterpillar expect sales and revenues in 2015 to be about $50 billion down from 55 billion last year.

The company has also lowered its expectations for the construction equipment sales in China despite a growth in 2014.

“While we are, without a doubt, facing a tough year in 2015, we’re driving cost management through additional restructuring actions and continued operational improvements gained from our focus on Lean Management.  While 2015 will be difficult, the work we’ve done to improve our cost structure, market position and quality will position us for better results when the world economy and the key industries we serve improve,” Oberhelman added.

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Author: Samuel Kamau Mbote

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