Oct. 23--Another rough quarter for mining revenue contributed to another sharp profit decrease for Caterpillar Inc.
The company reported Wednesday an 18.4 percent drop in third-quarter net income, to $13.4 billion.
Investors reacted to the revenue drop by sending the share price down 5.9 percent, or by $5.29, to $83.88 as of 10:30 a.m. Wednesday. Its 52-week low is $79.49.
The company did not provide specific plant information in its quarterly report on continuing cost-cutting measures.
However, it is likely that its Winston-Salem plant and its 371 employees are being affected in a trickle down effect, whether directly or indirectly.
"Actions taken already include many temporary plant shutdowns, a reduction of more than 13,000 of our global workforce throughout the past year, temporary layoffs for thousands of salaried and management employees, reductions in program spending, substantially lowered incentive pay, lower capital expenditures, and implementation of general austerity measures across the company," Caterpillar's chairman and chief executive, Doug Oberhelman, said in a statement.
The company said it had eliminated 7,607 full-time employees globally since Sept. 30, 2012, leaving it with 121,506. In the same time span, it has cut 6,054 temporary jobs, reducing that workforce 28 percent to 15,598. Affected altogether were 4,098 U.S. job positions and 9,084 non-U.S. positions.
Caterpillar officials could not be reached for immediate comment Wednesday on the effect of the revenue decline, both overall and mining, on the Winston-Salem plant.
Caterpillar spokesman Jim Dugan said July 24 that "cost-cutting measures will be rolled out across the company and will be customized to each division and their locations. When and where we take steps, we will communicate those steps to employees first. We are not going to provide specific information for each facility at this time."
Caterpillar opened the $426 million axle-manufacturing plant in Winston-Salem in November 2011, with the axles being used in its large-scale mining trucks.
The company has pledged to create 392 full-time and 118 contract jobs when the plant is at full production.
The last workforce count provided by Caterpillar, on March 8, had the plant at 371 employees, of which 191 were full-time company employees. Caterpillar officials said they wanted to have a relatively large contract workforce as part of their strategy for handling dips in customer demand for products. It said when the plant opened it had a year's backlog of orders.
Human-resources officials with the local Caterpillar plant participated in the recent Winston-Salem Urban League job fair, which has as its goal including companies that are actively interviewing and hiring workers.
Oberhelman warned Wednesday that about 75 percent of the sales drop is from its Resource Industries segment, which is primarily mining operations.
"We expect Resource Industries sales to be down close to 40 percent for the full year and Power Systems' and Construction Industries' sales to each be down about 5 percent," he said.
Diluted earnings fell to $1.45 a share for the quarter, down from $2.54 from a year ago. The average earnings forecast was $1.68 by 14 analysts surveyed by Zacks Investment Research.
The company has revised its fiscal 2013 outlook to $55 billion with earnings per share of about $5.50. The previous outlook was a range of $56 billion to $58 billion with earnings per share predicted at $6.50 in the middle of that range.
The company said that "not only is mining down from 2012, the demand for equipment has been difficult to forecast. Orders for new mining equipment began to drop significantly in mid-2012 and have continued at very low levels."
"With $11 billion coming off the top line, it has been a painful year and has required wide ranging and substantial actions across the company," Oberhelman said. "Year-to-date, excluding the impact of inventory absorption, we've lowered costs about $700 million and reduced capital expenditures by about $400 million.
"We can't change the economy or industry demand, but we've taken many actions to align our costs with the environment we're in currently. While we've done much already, we're not finished and expect to take deeper actions to improve our cost structure and balance sheet.
"We're not seeing bright spots in mining yet, but the turnaround will happen at some point, and when it does, we'll be ready to respond," Oberhelman said.
(c)2013 Winston-Salem Journal (Winston Salem, N.C.)
Visit Winston-Salem Journal (Winston Salem, N.C.) at www2.journalnow.com
Distributed by MCT Information Services
Original headline: Caterpillar profits down sharply
Photo: Zachi Evenor
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