Caterpillar is one of the bluechip giants in the Dow Jones composite. They are one of the largest construction firms in the world and employ over 114,000 people. The construction industry is always the litmus test to show how well an economy is performing and progressing.
CEO Douglas R. Oberhelman has announced that he will retire from the company after spending over 6 years at the firm. Jim Umpleby will be appointed as the next CEO in 2017. Following a turbulent few years, the company has undergone many strategic changes under Oberhelman. In 2010 he began to invest heavily into the Chinese economy, he foresaw huge potential growth in the construction and mining sector. By 2014 CAT open as many as 26 operating plants across China hoping to receive massive orders for their mining machinery and equipment. However the aggressive strategy hasn’t quite worked according to plan. China’s economy was facing a slowdown and sales fell dramatically. The company had to downsize, shedding over 20% of their workforce and expenses. The market decline in 2013-15 and slumping energy prices placed additional pressure on Caterpillar finances.
This year, the situation improved with the company issuing positive quarterly results. Oil prices recovered slightly and CAT stock prices also grew from $58 to $87, a sharp rise of nearly 33% since the turn of the year. With Oberhelman leaving the centre stage, Umpleby’s first objective in office is to review their strategic directions to ensure the firm stays on the right path. Caterpillar’s next quarterly financial results are due on October 25th.