Caterpillar says it could cut 10,000 jobs to reduce costs
Caterpillar is planning another round of job cuts that could exceed 10,000 people through 2018, as the construction and mining equipment maker adjusts to downturns in key markets that it serves.
That could amount to more than 8 percent of the 126,800 employees it had globally as of June.
The Peoria, Illinois, company said Thursday that it will cut as many as 5,000 people mostly by the end of this year from its salaried and management workforce. It then could cut thousands more, raising the total above 10,000, as it figures out which factories and manufacturing sites to close through 2018.
Caterpillar also said Thursday that it was dropping its 2015 revenue forecast by $1 billion, and its profit expectation will take a hit as well.
The company said it faces challenging conditions in key sectors. Company officials said in a statement that industries like mining, oil and gas, construction, and rail have a history that sometimes includes prolonged downturns, but they are the right businesses to be in for the long term.
The company has been hurt, in particular, by a slowdown in China's construction boom. That contributed to a 21 percent drop in Caterpillar's Asia-Pacific region sales during the second quarter.
Caterpillar now expects 2015 revenue of about $48 billion, and it said 2016 sales should be about 5 percent lower.
Analysts expect, on average, revenue of $48.93 billion this year, according to FactSet.
The company didn't update its 2015 profit forecast, but it noted that the lower sales outlook and higher restructuring costs will hurt its bottom line. It said it would provide an update when it releases third-quarter results in late October.
The company said the job cuts announced Thursday and other expense reductions are expected to help lower operating costs by around $1.5 billion.
Caterpillar has trimmed its total workforce by more than 31,000 since the middle of 2012. Caterpillar Inc. It also has closed or laid out plans to close more than 20 manufacturing locations since 2013.
Shares of Caterpillar Inc. sank more than 6 percent, or $4.38, to $65.82 in midday trading Thursday, while broader indexes dropped more than 1 percent. Caterpillar's stock price had fallen more than 23 percent so far this year, as of Wednesday's close.