REG-Caterpillar Inc: 1st Quarter Results <Origin Href="QuoteRef">CAT.N</Origin> - Part 1
22/04/2016 12:39
Caterpillar Reports First-Quarter 2016 Results
Sales and Revenues and Profit Excluding Restructuring Costs About As Expected
PEORIA, Ill., April 22, 2016 --
First Quarter
($ in billions except profit per share) 2015 2016
Sales and Revenues $12.702 $9.461
Profit Per Share $2.03 $0.46
Profit Per Share $2.07 $0.67
(Excluding Restructuring Costs)
Caterpillar Inc. (NYSE: CAT) today announced first-quarter 2016 sales and
revenues of $9.5 billion, down from $12.7 billion in the first quarter of 2015.
First-quarter 2016 profit per share of $0.46 was down from a profit of $2.03
per share in the first quarter of 2015. Excluding restructuring costs, profit
per share was $0.67, compared with $2.07 per share in the first quarter of
2015.
"While first-quarter results were about as we expected, sales and profit were
well below the first quarter of 2015. Sales declined across the company with
substantial reductions in construction, oil and gas, mining and rail. While
many of the industries we serve are challenged, we remain focused on what we
can control: the quality of our products, our market position, safety in our
facilities and continued restructuring and cost reduction. In fact, our period
costs andvariable manufacturing costs in the quarter were nearly $500 million
lower than the first quarter of 2015," said Caterpillar Chairman and Chief
Executive Officer Doug Oberhelman.
2016 Outlook
We have seen recent increases in commodity prices, some signs of improvement in
construction equipment in China and better order activity than we expected at
bauma, the world's leading trade fair for many of the industries we serve.
While we are seeing a few positive signals, other parts of our business remain
challenged. As a result, we have lowered the midpoint of the outlook for 2016
sales and revenues about 2 percent.
Sales and revenues in 2016 are expected to be in a range of $40 to $42 billion
with a midpoint of $41 billion. The previous outlook was a range of $40 to $44
billion with a midpoint of $42 billion. The decline in the midpoint of the
sales and revenues outlook range is a result of several factors that, while not
individually large in the context of the outlook, collectively add up to about
$1 billion. Those factors include lower transportation sales (rail, marine and
the ending of production of on-highway vocational trucks), lower mining sales
and weaker price realization than previously expected.
The profit outlook at the midpoint of the sales and revenues range is now $3.00
per share, or $3.70 per share excluding restructuring costs. The previous
profit outlook was $3.50 per share, or $4.00 per share excluding restructuring
costs at the midpoint of the previous sales and revenues outlook. The expected
decline in sales and revenues and an increase in expected restructuring costs
are the primary reasons for the decline in the profit outlook.
Restructuring costs are now expected to be about $550 million in 2016, up $150
million from the previous outlook. The decision to end production of
on-highway vocational trucks is the primary reason for the increase in
restructuring costs.
"While many of the industries we serve are challenged today, we're looking
ahead and investing for the future. We're investing substantially in R&D,
driving forward on our Lean journey, continuing implementation of Across the
Table with our dealers and accelerating our digital strategy," said Oberhelman.
"Our digital strategy is an exciting investment for the long term. We're hard
at work, inside Caterpillar and with our digital partners, developing the data
architecture and applications that will make our products smarter and help our
customers improve productivity and safety. Our goal is to help customers be
more productive, better manage their fleets and make more money with
Caterpillar than they could with our competitors. Our approximately 400,000
(and growing) connected assets mean entire fleets and job sites - from machines
to tablets to drones - will eventually share data on one common technology
platform in the age of smart iron. One thing that I am certain of is that it's
times like these when the Caterpillar team demonstrates the innovation and
ambition to be the leader in all we do," added Oberhelman.
Highlights
* First-quarter sales and revenues and profit excluding restructuring costs
about as expected
* Continued tough market conditions in many of the company's businesses -
Mining, oil and gas, rail and construction in key developing countries
* Good operational performance continues - Overall machine market position
better in first quarter of 2016 than this point last year; continues to
improve in China. Focus remains on quality, safety and cost reduction
* Outlook lowered - Midpoint of sales and revenues range lowered about 2
percent
* Strong balance sheet - Maintained $0.77 per share dividend (announced
April 13, 2016)
* Significant progress on restructuring actions - Contributed to substantial
cost reduction in first quarter
* Investment in the future continues - Focus on accelerated digital
technology, R&D, Lean and dealer-focused initiative "Across the Table"
Recast of 2015 Earnings for Change in Accounting Principle
As discussed in the year-end 2015 earnings release, Caterpillar has implemented
a change in accounting principle for pension and OPEB costs. Under the new
accounting principle, we will recognize actuarial gains and losses as a
mark-to-market gain or loss when they occur rather than amortizing them to
earnings over time. As a result of the accounting change, 2015 earnings have
been recast to make results comparable on a year-over-year basis. The
accounting change added $0.68 per share to 2015 profit. Profit per share for
2015 has been recast from $3.50 per share to $4.18 per share. Excluding
mark-to-market pension and OPEB losses and restructuring costs, profit per
share for 2015 has been recast from $4.64 per share to $5.47 per share.
First-quarter 2015 profit per share has been recast from $1.81 per share to
$2.03 per share. Excluding restructuring costs first-quarter 2015 profit per
share has been recast from $1.86 per share to $2.07 per share. More
information on the impact of the change in accounting principle can be found on
page 14.
Notes:
* Glossary of terms is included on pages 19-20; first occurrence of terms
shown in bold italics.
* Information on non-GAAP financial measures is included on page 21.
* Caterpillar will conduct a teleconference and live webcast, with a slide
presentation, beginning at 10 a.m. Central Time on Friday, April 22, 2016,
to discuss its 2016 first-quarter results. The slides accompanying the
webcast will be available before the webcast on the Caterpillar website at
http://www.caterpillar.com/investors/events-and-presentations .
About Caterpillar:
For 90 years, Caterpillar Inc. has been making sustainable progress possible
and driving positive change on every continent. Customers turn to Caterpillar
to help them develop infrastructure, energy and natural resource assets. With
2015 sales and revenues of $47.011 billion, Caterpillar is the world's leading
manufacturer of construction and mining equipment, diesel and natural gas
engines, industrial gas turbines and diesel-electric locomotives. The company
principally operates through its three product segments - Construction
Industries, Resource Industries and Energy & Transportation - and also provides
financing and related services through its Financial Products segment. For
more information, visit caterpillar.com. To connect with us on social media,
visit caterpillar.com/social-media.
Forward-Looking Statements
Certain statements in this press release relate to future events and
expectations and are forward-looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995. Words such as "believe,"
"estimate," "will be," "will," "would," "expect," "anticipate," "plan,"
"project," "intend," "could," "should" or other similar words or expressions
often identify forward-looking statements. All statements other than
statements of historical fact are forward-looking statements, including,
without limitation, statements regarding our outlook, projections, forecasts or
trend descriptions. These statements do not guarantee future performance, and
we do not undertake to update our forward-looking statements.
Caterpillar's actual results may differ materially from those described or
implied in our forward-looking statements based on a number of factors,
including, but not limited to: (i) global and regional economic conditions and
economic conditions in the industries we serve; (ii) government monetary or
fiscal policies and infrastructure spending; (iii) commodity price changes,
component price increases, fluctuations in demand for our products or
significant shortages of component products; (iv) disruptions or volatility in
global financial markets limiting our sources of liquidity or the liquidity of
our customers, dealers and suppliers; (v) political and economic risks,
commercial instability and events beyond our control in the countries in which
we operate; (vi) failure to maintain our credit ratings and potential resulting
increases to our cost of borrowing and adverse effects on our cost of funds,
liquidity, competitive position and access to capital markets; (vii) our
Financial Products segment's risks associated with the financial services
industry; (viii) changes in interest rates or market liquidity conditions; (ix)
an increase in delinquencies, repossessions or net losses of Cat Financial's
customers; (x) new regulations or changes in financial services regulations;
(xi) a failure to realize, or a delay in realizing, all of the anticipated
benefits of our acquisitions, joint ventures or divestitures; (xii)
international trade policies and their impact on demand for our products and
our competitive position; (xiii) our ability to develop, produce and market
quality products that meet our customers' needs; (xiv) the impact of the highly
competitive environment in which we operate on our sales and pricing; (xv)
failure to realize all of the anticipated benefits from initiatives to increase
our productivity, efficiency and cash flow and to reduce costs; (xvi)
additional restructuring costs or a failure to realize anticipated savings or
benefits from past or future cost reduction actions; (xvii) inventory
management decisions and sourcing practices of our dealers and our OEM
customers; (xviii) compliance with environmental laws and regulations; (xix)
alleged or actual violations of trade or anti-corruption laws and regulations;
(xx) additional tax expense or exposure; (xxi) currency fluctuations; (xxii)
our or Cat Financial's compliance with financial covenants; (xxiii) increased
pension plan funding obligations; (xxiv) union disputes or other employee
relations issues; (xxv) significant legal proceedings, claims, lawsuits or
government investigations; (xxvi) changes in accounting standards; (xxvii)
failure or breach of IT security; (xxviii) adverse effects of unexpected events
including natural disasters; and (xxix) other factors described in more detail
under "Item 1A. Risk Factors" in our Form 10-K filed with the SEC on February
16, 2016 for the year ended December 31, 2015.
CONSOLIDATED RESULTS
Consolidated Sales and Revenues
Consolidated Sales and Revenues Comparison
First Quarter 2016 vs. First Quarter 2015
To access this chart, go to http://www.caterpillar.com/en/investors/
quarterly-results.html for the downloadable version of Caterpillar 1Q 2016
earnings.
The chart above graphically illustrates reasons for the change in Consolidated
Sales and Revenues between the first quarter of 2015 (at left) and the first
quarter of 2016 (at right). Items favorably impacting sales and revenues
appear as upward stair steps with the corresponding dollar amounts above each
bar, while items negatively impacting sales and revenues appear as downward
stair steps with dollar amounts reflected in parentheses above each bar.
Caterpillar management utilizes these charts internally to visually communicate
with the company's Board of Directors and employees.
Sales and Revenues
Total sales and revenues were $9.461 billion in the first quarter of 2016,
compared with $12.702 billion in the first quarter of 2015, a decline of $3.241
billion, or 26 percent. The decrease was primarily due to lower sales volume.
While sales for both new equipment and aftermarket parts declined in all
segments, most of the decrease was for new equipment. The unfavorable impact
of price realization and currency also contributed to the decline.
Sales declined in all regions. In North America, sales decreased 26 percent
due to both lower end-user demand, primarily in Energy & Transportation, and
the unfavorable impact of changes in dealer inventories, primarily in
Construction Industries. In EAME, sales declined 24 percent, primarily in
Africa/Middle East due to weak economic conditions resulting from low oil and
other commodity prices. Asia/Pacific sales declined 23 percent, primarily due
to lower end-user demand for Energy & Transportation applications and products
used in mining. Sales decreased 43 percent in Latin America, primarily due to
widespread economic weakness across the region. The most significant decreases
were in Brazil and Mexico.
Sales decreased in all segments. Energy & Transportation's sales declined 33
percent largely due to lower end-user demand for oil and gas and transportation
applications. Construction Industries' sales decreased 19 percent, primarily
due to the unfavorable impact of changes in dealer inventories, lower demand
from end users and unfavorable price realization. Resource Industries' sales
declined 26 percent, mostly due to continued low end-user demand. Financial
Products' segment revenues were down 7 percent, primarily due to lower average
earning assets and lower average financing rates.
Consolidated Operating Profit
Consolidated Operating Profit Comparison
First Quarter 2016 vs. First Quarter 2015
To access this chart, go to http://www.caterpillar.com/en/investors/
quarterly-results.html for the downloadable version of Caterpillar 1Q 2016
earnings.
The chart above graphically illustrates reasons for the change in Consolidated
Operating Profit (Loss) between the first quarter of 2015 (at left) and the
first quarter of 2016 (at right). Items favorably impacting operating
profit appear as upward stair steps with the corresponding dollar amounts above
each bar, while items negatively impacting operating profit appear as downward
stair steps with dollar amounts reflected in parentheses above each bar.
Caterpillar management utilizes these charts internally to visually communicate
with the company's Board of Directors and employees. The bar entitled Other
includes consolidating adjustments and Machinery, Energy & Transportation other
operating (income) expenses.
Operating profit for the first quarter of 2016 was $494 million, compared with
$1.702 billion in the first quarter of 2015. The decrease of $1.208 billion
was primarily due to lower sales volume, including an unfavorable mix of
products, resulting from continued weak commodity prices globally and economic
weakness in developing countries. In addition, price realization and
restructuring costs were unfavorable. These items were partially offset by
favorable period costs and variable manufacturing costs.
The unfavorable price realization resulted from competitive market conditions
and an unfavorable geographic mix of sales. Variable manufacturing costs were
favorable, primarily due to improved material costs. Period costs were lower,
primarily resulting from substantial restructuring and cost reduction actions
and lower short-term incentive compensation expense. The reductions impacted
period manufacturing costs and selling, general and administrative expenses (SG
&A). Research and development expenses (R&D) were about flat.
Restructuring costs of $161 million in the first quarter of 2016 were primarily
related to our decision to discontinue production of on-highway vocational
trucks and other restructuring actions across the company. In the first
quarter of 2015, restructuring costs were $35 million.
Other Profit/Loss Items
* Other income/expense in the first quarter of 2016 was zero, compared with
income of $194 million in the first quarter of 2015. The unfavorable change
was primarily due to the absence of a gain of $120 million on the sale of
the remaining 35 percent interest in our former third-party logistics
business. In addition, the net impact from currency translation and hedging
gains and losses was unfavorable. There were net losses in the first
quarter of 2016, compared to net gains in the first quarter of 2015.
* The provision for income taxes in the first quarter reflects an estimated
annual tax rate of 25 percent, compared to 29.5 percent for the first
quarter of 2015 and 25.5 percent for the full-year 2015 excluding discrete
items. The full-year rate for 2015 was lower than the first-quarter 2015
rate, primarily due to changes in the geographic mix of profits from a tax
perspective along with the impact of the permanent renewal of the U.S.
research and development tax credit in the fourth quarter of 2015.
Global Workforce
Caterpillar worldwide, full-time employment was about 101,400 at the end of the
first quarter of 2016, compared with about 113,300 at the end of the first
quarter of 2015, a decrease of about 11,900 full-time employees. The flexible
workforce decreased by about 3,200 for a total decrease in the global workforce
of about 15,100. The decrease was primarily the result of restructuring
programs and lower production volumes.
March 31
2016 2015 Increase/
(Decrease)
Full-time employment 101,400 113,300 (11,900)
Flexible workforce 12,900 16,100 (3,200)
Total 114,300 129,400 (15,100)
Geographic summary of change
U.S. workforce (8,000)
Non-U.S. workforce (7,100)
Total (15,100)
SEGMENT RESULTS
Segment results for the first quarter of 2015 have been recast. See page 14
for additional details.
Sales and Revenues by Geographic
Region
% North % Latin % % Asia/ %
(Millions of Total Change America Change America Change EAME Change Pacific Change
dollars)
First Quarter
2016
Construction $ 4,043 (19) % $ 2,058 (18) % $ 231 (52) % $ 847 (17) % $ 907 (9) %
Industries¹
Resource 1,449 (26) % 604 (23) % 268 (14) % 262 (43) % 315 (23) %
Industries²
Energy & 3,278 (33) % 1,566 (34) % 200 (53) % 982 (21) % 530 (40) %
Transportation³
All Other 38 (47) % 15 (42) % 1 (75) % 9 (63) % 13 (28) %
Segments?
Corporate Items (28) (24) (1) (2) (1)
and Eliminations
Machinery, Energy $ 8,780 (27) % $ 4,219 (26) % $ 699 (43) % $ 2,098 (24) % $ 1,764 (23) %
& Transportation
Financial $ 743 (7) % $ 459 2 % $ 87 (19) % $ 98 (10) % $ 99 (23) %
Products Segment
Corporate Items (62) (34) (14) (4) (10)
and Eliminations
Financial $ 681 (8) % $ 425 - % $ 73 (25) % $ 94 (10) % $ 89 (24) %
Products Revenues
Consolidated $ 9,461 (26) % $ 4,644 (24) % $ 772 (41) % $ 2,192 (23) % $ 1,853 (23) %
Sales and
Revenues
First Quarter
2015
Construction $ 5,014 $ 2,520 $ 480 $ 1,017 $ 997
Industries¹
Resource 1,971 789 311 462 409
Industries²
Energy & 4,915 2,368 425 1,244 878
Transportation³
All Other 72 26 4 24 18
Segments?
Corporate Items (11) (16) 1 1 3
and Eliminations
Machinery, Energy $11,961 $ 5,687 $ 1,221 $ 2,748 $ 2,305
& Transportation
Financial $ 795 $ 451 $ 107 $ 109 $ 128
Products Segment
Corporate Items (54) (28) (10) (5) (11)
and Eliminations
Financial $ 741 $ 423 $ 97 $ 104 $ 117
Products Revenues
Consolidated $12,702 $ 6,110 $ 1,318 $ 2,852 $ 2,422
Sales and
Revenues
1 Does not include inter-segment sales of $8 million and $23 million
in first quarter 2016 and 2015, respectively.
2 Does not include inter-segment sales of $71 million and $87 million
in first quarter 2016 and 2015, respectively.
3 Does not include inter-segment sales of $632 million and $794
million in first quarter 2016 and 2015, respectively.
4 Does not include inter-segment sales of $92 million and $103 million
in first quarter 2016 and 2015, respectively.
Sales and Revenues by Segment
First Sales Price First $ %
(Millions of Quarter 2015 Volume Realization Currency Other Quarter 2016 Change Change
dollars)
Construction $ 5,014 $ (701) $ (172) $ (98) $ - $ 4,043 $ (971) (19) %
Industries
Resource 1,971 (463) (38) (21) - 1,449 (522) (26) %
Industries
Energy & 4,915 (1,543) (24) (70) - 3,278 (1,637) (33) %
Transportation
All Other 72 (33) - (1) - 38 (34) (47) %
Segments
Corporate (11) (19) - 2 - (28) (17)
Items and
Eliminations
Machinery, $ 11,961 $ (2,759) $ (234) $ (188) $ - $ 8,780 $ (3,181) (27) %
Energy &
Transportation
Financial 795 - - - (52) 743 (52) (7) %
Products
Segment
Corporate (54) - - - (8) (62) (8)
Items and
Eliminations
Financial $ 741 $ - $ - $ - $ (60) $ 681 $ (60) (8) %
Products
Revenues
Consolidated $ 12,702 $ (2,759) $ (234) $ (188) $ (60) $ 9,461 $ (3,241) (26) %
Sales and
Revenues
Operating
Profit (Loss)
by Segment
First First $ %
(Millions of Quarter 2016 Quarter 2015 Change Change
dollars)
Construction $ 440 $ 745 $ (305) (41) %
Industries
Resource (96) 96 (192) (200) %
Industries
Energy & 410 1,024 (614) (60) %
Transportation
All Other (7) (7) - - %
Segments
Corporate (357) (319) (38)
Items and
Eliminations
Machinery, $ 390 $ 1,539 $ (1,149) (75) %
Energy &
Transportation
Financial 168 227 (59) (26) %
Products
Segment
Corporate (1) 3 (4)
Items and
Eliminations
Financial $ 167 $ 230 $ (63) (27) %
Products
Consolidating (63) (67) 4
Adjustments
Consolidated $ 494 $ 1,702 $ (1,208) (71) %
Operating
Profit (Loss)
CONSTRUCTION INDUSTRIES
(Millions
of dollars)
Sales Comparison
First Quarter Sales Price Currency First Quarter $ %
2015 Volume Realization 2016 Change Change
Sales $5,014 ($701) ($172) ($98) $4,043 ($971) (19) %
Comparison1
Sales by Geographic
Region
First Quarter First Quarter $ %
2016 2015 Change Change
North $2,058 $2,520 ($462) (18) %
America
Latin 231 480 (249) (52) %
America
EAME 847 1,017 (170) (17) %
Asia/ 907 997 (90) (9) %
Pacific
Total1 $4,043 $5,014 ($971) (19) %
Operating
Profit
First Quarter First Quarter $ %
2016 2015 Change Change
Operating $440 $745 ($305) (41) %
Profit
1 Does not include inter-segment sales of $8 million and $23 million in first
quarter 2016 and 2015, respectively.
Construction Industries' sales were $4.043 billion in the first quarter of
2016, a decrease of $971 million, or 19 percent, from the first quarter of
2015. The decrease in sales was due to lower volume, unfavorable price
realization and the unfavorable impact of currency. While sales declined for
both new equipment and aftermarket parts, substantially all of the decrease was
for new equipment.
* Sales volume declined primarily due to the unfavorable impact of changes in
dealer inventories. Dealers increased inventories in both the first quarter
of 2016 and the first quarter of 2015; however, the increase was greater in
the first quarter of 2015. In addition, deliveries to end users were lower.
* The unfavorable impact of currency was due to the strengthening of the U.S.
dollar compared to most other currencies.
Sales decreased in all regions.
* In North America, the sales decline was primarily due to dealers increasing
inventories more significantly in the first quarter of 2015 than the first
quarter of 2016. In addition, although residential and nonresidential
construction activity is improving, sales to end users were lower than the
first quarter of 2015. We believe declines in construction activity related
to oil and gas have resulted in the availability of existing construction
equipment for other purposes. Unfavorable price realization resulted from
competitive market conditions.
* In Latin America, end-user demand was down across the region, with the most
significant declines in Brazil due to depressed economic conditions and in
Mexico due to weak construction activity.
* Lower sales in EAME were primarily due to unfavorable price realization and
lower end-user demand. Price realization was unfavorable across the region
due to competitive market conditions. The decline in end-user demand was
most significant in oil-producing economies. In addition, sales declined in
South Africa where we believe an uncertain regulatory and political
environment contributed to lower end-user demand.
* Sales in Asia/Pacific were down as a result of the unfavorable impact of
changes in dealer inventories, which were about flat in the first quarter
of 2016 and increased in the first quarter of 2015.
Construction Industries' profit was $440 million in the first quarter of 2016,
compared with $745 million in the first quarter of 2015. The decrease in
profit was primarily due to lower sales volume, including an unfavorable mix of
products and unfavorable price realization resulting from competitive market
conditions. The decline was partially offset by favorable costs, primarily due
to restructuring and cost reduction actions and lower material costs.
RESOURCE INDUSTRIES
(Millions
of dollars)
Sales Comparison
First Quarter Sales Price Currency First Quarter $ %
2015 Volume Realization 2016 Change Change
Sales $1,971 ($463) ($38) ($21) $1,449 ($522) (26) %
Comparison1
Sales by Geographic
Region
First Quarter First Quarter $ %
2016 2015 Change Change
North $604 $789 ($185) (23) %
America
Latin 268 311 (43) (14) %
America
EAME 262 462 (200) (43) %
Asia/ 315 409 (94) (23) %
Pacific
Total1 $1,449 $1,971 ($522) (26) %
Operating Profit (Loss)
First Quarter First Quarter $ %
2016 2015 Change Change
Operating ($96) $96 ($192) (200) %
Profit
(Loss)
1 Does not include inter-segment sales of $71 million and $87 million in first
quarter 2016 and 2015, respectively.
Resource Industries' sales were $1.449 billion in the first quarter of 2016, a
decrease of $522 million, or 26 percent, from the first quarter of 2015. The
decline was primarily due to lower sales volume. Sales were lower for both new
equipment and aftermarket parts.
The sales decrease was primarily due to lower end-user demand across all
regions. In addition, the sales decline in EAME was partially due to the
unfavorable impact of changes in dealer inventories, as dealers lowered
inventories in the first quarter of 2016, compared to increasing inventories in
the first quarter of 2015.
Commodity prices improved from their recent lows, but excess supply remains.
It is not clear at this time that the current prices are either sustainable or
sufficient to drive increased demand for equipment. Mining customers continued
to focus on improving productivity in existing mines and reducing their total
capital expenditures, as they have for several years. As a result, sales and
new orders in Resource Industries continue to be weak.
Resource Industries incurred a loss of $96 million in the first quarter of
2016, compared with profit of $96 million in the first quarter of 2015. The
unfavorable change was due to lower sales volume and negative price
realization. This was partially offset by improved period manufacturing and SG
&A expenses due to restructuring and cost reduction actions.
ENERGY & TRANSPORTATION
(Millions
of dollars)
Sales Comparison
First Quarter Sales Price Currency First Quarter $ %
2015 Volume Realization 2016 Change Change
Sales $4,915 ($1,543) ($24) ($70) $3,278 ($1,637) (33) %
Comparison1
Sales by Geographic
Region
First Quarter First Quarter $ %
2016 2015 Change Change
North $1,566 $2,368 ($802) (34) %
America
Latin 200 425 (225) (53) %
America
EAME 982 1,244 (262) (21) %
Asia/ 530 878 (348) (40) %
Pacific
Total1 $3,278 $4,915 ($1,637) (33) %
Operating
Profit
First Quarter First Quarter $ %
2016 2015 Change Change
Operating $410 $1,024 ($614) (60) %
Profit
1 Does not include inter-segment sales of $632 million and $794 million in
first quarter 2016 and 2015, respectively.
Energy & Transportation's sales were $3.278 billion in the first quarter of
2016, a decrease of $1.637 billion, or 33 percent, from the first quarter of
2015. The decrease was primarily the result of lower sales volume. Sales
decreased in all applications with more than 80 percent of the decline in oil
and gas and transportation.
* Oil and Gas - Sales continued to decrease in much of the world due to low
oil prices. The sales decline was most significant in equipment used for
gas compression, well servicing and production, with the most significant
impact in North America. The decline in sales of equipment for gas
compression was primarily in reciprocating engines.
* Transportation - Sales decreased in all geographic regions. The most
significant decline was in North America, primarily due to significant
weakness in the rail industry. In addition, the first quarter of 2015
benefited from deliveries of locomotives that began production in 2014. In
Asia/Pacific, the decrease was due to the absence of a large locomotive
sale in the first quarter of 2015 and a decline for equipment used in
marine applications.
* Power Generation - Sales decreased significantly in Latin America and North
America, slightly in EAME and were about flat in Asia/Pacific. The decline
is primarily due to weak economic conditions in Latin America and the
absence of several large projects in North America.
* Industrial - Sales were lower in Asia/Pacific, Latin America and North
America and about flat in EAME. The decline in sales was primarily due to
lower end-user demand for most industrial applications.
Energy & Transportation's profit was $410 million in the first quarter of 2016,
compared with $1.024 billion in the first quarter of 2015. The decline was due
to a decrease in sales volume, partially offset by lower costs primarily due to
restructuring and cost reduction actions and favorable material costs.
FINANCIAL PRODUCTS SEGMENT
(Millions of dollars)
Revenues by Geographic Region
First Quarter First Quarter $ %
2016 2015 Change Change
North America $459 $451 $8 2 %
Latin America 87 107 (20) (19) %
EAME 98 109 (11) (10) %
Asia/Pacific 99 128 (29) (23) %
Total $743 $795 ($52) (7) %
Operating Profit
First Quarter First Quarter $ %
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