Caterpillar Inc. today, April 21, reported first-quarter 2009 sales and revenues were $9.225 billion, down 22 percent from $11.796 billion in the first quarter 2008. The company posted a loss of $112 million, down $1.034 billion from a $922 million profit. The company said the decrease was largely a result of lower sales and revenues and $558 million of redundancy costs.
“These results demonstrate significant reduction in our cost structure as a result of swift deployment of the economic trough strategy we introduced in 2005,” said Jim Owens, chairman and chief executive officer of Peoria, Ill.-based Caterpillar. “Our business units are making the tough decisions necessary to respond to this widespread and sharp global recession. By taking aggressive and decisive actions now, we’re positioning the company not only for success in the short term, but to be even more competitive in the long term when the global economy recovers.”
Owens said the company also was pleased with the improvement in price realization during the quarter. “It’s a testament to the value customers place on our products,” he said. “In addition to cost control, we’re very focused on maintaining our financial strength. We expect to lower inventory by about $3 billion in 2009 and reduced it by $789 million in the first quarter. Inventory management is a key element of the Caterpillar Production System using 6 Sigma, and we are pleased with the traction we’re gaining.”
Owens said that in this environment, liquidity is a major focus, and as a result Caterpillar has decided to hold more cash than usual. “While we do not anticipate the need to issue additional term debt during the remainder of the year, we may do so to maintain our liquidity position,” he said. “Maintaining Caterpillar’s financial strength through these very difficult times will allow us to emerge a stronger company.”
Owens said a great deal of uncertainty exists in the global economy, making it extremely difficult to know how Caterpillar’s customers will respond during the remainder of 2009. “One thing is clear — Team Caterpillar will remain focused on containing costs and reducing inventory,” Owens said. “We will take action to keep Caterpillar lean, while at the same time making strategic product and operational investments to position Caterpillar for long-term success when the economy does recover.”
Owens said this is an extremely difficult time for employees affected by the severe economic downturn, and providing them with financial assistance and transitional support is important. “While redundancy costs have been a considerable expense, it’s the right thing to do for our people,” he said.