Recession-slammed Caterpillar posts first quarterly loss since '92

CHICAGO, Apr 21, 2009 (Chicago Tribune - McClatchy-Tribune News Service via COMTEX) -- CAT | Quote | Chart | News | PowerRating -- Caterpillar Inc., hampered by more than half a billion dollars in costs from its large-scale work force cuts as well as recession-battered sales, swung to a loss in the first quarter and lowered its profit guidance for full-year 2009.

The Peoria, Ill., heavy-equipment giant reported a net loss of $112 million, or 19 cents a share, in stark contrast to the year-ago quarter's robust net income of $922 million, or $1.45 a share.

Despite years of management efforts to reduce the company's exposure to roller-coaster economic cycles, Caterpillar remains a classic "cyclical" company that makes equipment used to construct buildings, dams, highways and airports; huge diesel engines used to generate electricity at oil rigs and to power ocean liners; and giant trucks in demand when copper and iron-ore mines are busy.

Twelve months ago, the implosion of the housing bubble had sent the U.S. economy into a tailspin, and North American demand for Caterpillar's earthmovers and other construction equipment was already tapering off _ but overseas sales, which generate more than half the company's revenue, were still booming and Caterpillar's factories were running flat out to keep out with demand.

Since the recession became global last autumn, however, demand has tumbled and Caterpillar announced production cuts during the first quarter that will slash 22,000 workers from its payroll.

"Our business units are making the tough decisions necessary to respond to this widespread and sharp global recession," said Chairman and Chief Executive Jim Owens, who noted that the company recorded $558 million in "redundancy costs" associated with the job cuts.

Excluding those costs, the company said, Caterpillar's earnings would have been 39 cents a share, technically a stronger performance than the 4 to 8 cents many analysts had been anticipating.

Caterpillar shares gained 91 cents, or $1.43, Tuesday to close at $31.39.

Revenue slumped 22 percent in the latest quarter, to $9.23 billion from the year-earlier period's $11.8 billion.

As expected, Caterpillar on Tuesday offered an "update" for its 2009 earnings prospects. On paper, analysts had been expecting per-share earnings of $1.81 for the year, but that grew increasingly doubtful as the company's travails deepened through the quarter.

While noting the "high degree of uncertainty in the global economy," as well as uncertainties as to the timing and the ultimate impact of U.S. economic-stimulus measures, Caterpillar said it expects per-share earnings (exclusive of special items) in the neighborhood of $1.25 a share.

Revenue, Caterpillar said, is likely to be about $35 billion, though it could be as much as $38.5 billion or as little as $31.5 billion; at the low end, revenue would be down a punishing 39 percent from 2008's record $51.32 billion.

The latest quarter marked the first outright quarterly loss for Caterpillar since 1992.

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