Tomahawk, WI 10/24/2013 (BasicsMedia) – Caterpillar Inc. (NYSE:CAT) with its $54.24 billion market cap, manufactures a number of equipments used in both construction and mining industries. The company is also well known for manufacturing diesel and natural gas engines, in addition to electric locomotives that operate on diesel and industrial gas turbines. However, the company has not enjoyed the best of times in terms of posting positive results for most of 2013. Various reasons have been cited for this failure and here we will look at the factors that may have contributed to such a scenario.

CAT Posts Weaker Than Expected Financial Results for Q3 of 2013

When CAT recently posted its third quarter 2013 financial results, it quickly emerged that the company’s results were weaker than what was expected. During the third quarter of 2012, CAT’s revenue was $16.45 billion, compared to the $13.42 billion it managed to raise in the same period in 2013. Due to the not so pleasant financials ACT encountered in the third quarter, it has reduced its expectations for this fiscal year. Earlier, the company said it expected to raise between $56 and $58 billion, but has now adjusted the amount to not more than $55 billion.

The company expects its sales and revenue figures for the entire 2013 financial year to drop by around $11 billion from last year’s figures. It has announced that there will be a decline in sales and revenues for this entire financial year by around 17% from what the company managed to raise in 2012. This reduction started in late 2012 when orders for CAT’s mining equipment started dropping and the trend seems to have continued into 2013. CAT’s top executives announced that they expect this trend to continue for quite some time and see no change soon.

CAT’s Commodity Production Remains Quite Strong

CAT, to its credit, has not given up on commodity production, which is still quite strong despite the bad news from elsewhere. The poor sales and revenue figures announced by CAT for 2013 have forced the company to fire close to 13,000 workers globally. It has been left with no choice other than to close down some of its plants, although this is a temporary measure and CAT will reopen some of these facilities if the orders improve. CAT expects to see a better outlook for its business once orders start picking up towards the end of 2013, and possibly into 2014.

CAT is doing a number of things in the hope that these will help it overcome this difficult moment it is currently experiencing. It has lowered both the incentive pay as well as capital expenditures in the hope that this will help keep it in business through cutting down on costs and expenses. It has announced several austerity measures across every facet of the company with the intention of seeing CAT’s fortunes turn around for the good in 2013. CAT’s operating profit has been on a decline, but it hopes to stop this drop at not more than 30% in 2013.

I believe that CAT can still turn around this situation, and embark on a period of remarkable growth, although this will not happen overnight.

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