Caterpillar sees 50% net income fall but outgoing boss sees signs of hope
Global construction and mining giant Caterpillar, which employs nearly 1,800 people in Northern Ireland, has reported a slump in profits in the third quarter of the year.
The firm, which owns the generator maker formerly known as FG Wilson, had net income of $283m (£233m) in the third quarter, down more than 50% from $599m (£492m) in the third quarter of 2015.
And sales were down 16% to $9.16bn (£7.5bn), below the $9.8bn (£8m) analysts anticipated.
The firm said it is battling a weak global economy and stagnation for customers in its key sectors of mining and oil - but added that its moves to cut costs were paying off.
Its below-par financial performance follows job losses at aerospace manufacturer Bombardier, Northern Ireland's biggest manufacturer.
Caterpillar NI - formerly FG Wilson - itself reported a loss of £2.6m in 2015, down from profits of £3.8m a year earlier. It also said it had established a division to look after concerns over Brexit.
Economist John Simpson said he expected the financial woes of the parent company to continue to weigh on its Northern Ireland subsidiary. And he said the difficulties for manufacturers could be compounded by the effects of Brexit.
"My impression is that we should remain concerned that the future prospects for Caterpillar remain uncertain.
"This comes when we have reason to be worried about the longer term future of Bombardier in NI.
"The fears that Brexit would be damaging and distorting are growing, not diminishing."
Caterpillar's long-serving chief executive Doug Oberhelman is leaving the company after around 40 years, it announced last week.
In a statement accompanying yesterday's results, Mr Obeherhelman said: "Economic weakness throughout much of the world persists and, as a result, most of our end markets remain challenged. However, there were a few bright spots this quarter ... I'm pleased with how Caterpillar has responded and our team's focus on reducing costs and pulling through profit despite sluggish end markets. In the third quarter, despite a $1.8bn decline in sales and revenues, our operating profit pull-through was significantly better than our target range."
And he said lower manufacturing costs allowed it to offset much of the negative impact from a "weak sales environment".
Caterpillar NI, which announced 200 job losses and the closure of its Monkstown site earlier this year, reported a fall in turnover from £600m to £537m.
Its results also disclosed a fall in employment due to voluntary severance in the last quarter of the year, from 1,883 to 1,779.
And the number of generator sets it sold was down 40% from 20,541 to 12,306.
Its parent company now forecasts flat revenue for next year but said there could be a lift in profits if oil prices steady or increase.
Mr Oberhelman said: "While we are seeing early signals of improvement in some areas, we continue to face a number of challenges. We remain cautious as we look ahead to 2017, but are hopeful as the year unfolds we will begin to see more positive momentum. At some point, and I think we're getting closer to that point, our businesses will turn up."
Meanwhile, Economy Minister Simon Hamilton has said he'll work to protect jobs at Bombardier in Belfast after a meeting with trade union Unite yesterday.
Bombardier, which employs 5,000 people in east Belfast, last week said it will be cutting 7,500 jobs across its global operations.
The impact on its Belfast operation is not clear, although it is already facing 1,000 job cuts over the next two years. Following his meeting, Mr Hamilton said: "This was a useful and constructive meeting with Unite, who represent a significant number of Bombardier staff.
"While it's still not clear what the impact of this news will be for Bombardier staff in Northern Ireland, I stand ready with Unite to do anything that I can to safeguard jobs here."
However, the Minister has not commented on suggestions that Bombardier could seek a bail-out from Stormont.