Caterpillar Inc. (NYSE:CAT) reported second quarter earnings that were better than expected on Tuesday. Caterpillar reported second-quarter net profit of $550 million, down from a revised $802 million a year earlier. The heavy machinery maker reported $1.09 in earnings per share, excluding restructuring costs. This was higher than analysts’ expectations of 96 cents, but lower than a revised $1.40 in earnings per share recorded a year ago.
Caterpillar also lowered its full-year forecast for 2016, citing sluggish demand in mining and other industries. Caterpillar is now predicting earnings of $2.75 per share, or $3.55 excluding restructuring costs, for the year. Its previous forecast was for earnings of $3.00 per share, or $3.70 excluding restructuring costs. The company reduced its full-year sales outlook to a range of $40 billion to $40.5 billion, down from $40 billion to $42 billion. It was the second time Caterpillar lowered its full-year sales forecast for this year.
The weakened global economy has slowed sales of new machinery. In the second quarter, sales declined in all regions and in all Caterpillar segments. Total sales fell 16 percent from a year ago, dropping to $10.34 billion in the second quarter. Resource industries’ sales declined 29 percent, while energy and transportation sales declined 20 percent. Sales in the construction industries’ division fell 8 percent and revenue from the financial products’ segment fell 3 percent.
Caterpillar is currently the world’s largest construction and mining equipment maker. Chief Executive Officer Doug Oberhelman said in a statement, “We’re not expecting an upturn in important industries like mining, oil and gas and rail to happen this year.” The recent vote in Britain to leave the European Union and the attempted coup in Turkey have heightened global uncertainty. The company’s results were also being hurt by the strong dollar. The company has a significant part of its sales overseas.
Caterpillar announced a restructuring plan last year that would cut more than 10,000 jobs and consolidate or close manufacturing facilities over the next several years. The company has since reduced its global full-time and flexible workforce by 13,900. It ended the second quarter with about 100,000 full-time workers. Oberhelman says he expects more restructuring during 2017 and beyond. Caterpillar also raised its estimated expenses for restructuring during 2016 up to $700 million from $550 million.