The Very Under-Performing Caterpillar; H&M’s Fashionable Earnings; Nein the Better for Volkswagen

Cocooning…

Image courtesy of Supertrooper/FreeDigitalPhotos.net

Image courtesy of Supertrooper/FreeDigitalPhotos.net

Caterpillar took a brutal hit today on Wall Street, after cutting its sales outlook and whipping out bad news for some 5,000 employees who can expect a pink slip between now and the end of 2016. By 2018, that number is expected to reach 10,000. And there will be no transformation for this Caterpillar any time soon. There’s nothing flitty nor pretty this quarter about the fiscal health of this U.S-based company, whose performance tends to mirror that of the global economy as a whole. When Caterpillar fails to dazzle Wall Street, it’s safe to say something about the economy isn’t dazzling either. Caterpillar has even managed to take the Dow down with it today. The industries the company serves, namely mining, energy and construction, have been hit hard lately, especially in places like China, taking Caterpillar along for the unpleasant ride. This downturn has affected sales and revenue for the monster machines and shares of the company haven’t been this low since April 2010. It stands to be the first time in the company’s 90 year history that sales and revenue will decrease four years in a row. Caterpillar now expects to see $48 billion in sales, $1 billion less than what it was previously hoping to score. With the looming job cuts and big plans to restructure at over twenty plants, Caterpillar thinks it can cut $1.5 billion. Until then, the company hopes the industries it serves will break free from their fiscal cocoons and once again start pollinating the global financial markets.

Trending…

Image courtesy of Stuart Miles/FreeDigitalPhotos.net

Image courtesy of Stuart Miles/FreeDigitalPhotos.net

Maybe Caterpillar should consider going into fast-fashion for the time being. Clothing retailer H&M raked in some boffo earnings with sales growing a stylish 20%. The second largest clothing store in the world also has big plans to make its way into China with over 200 stores set to open there, despite the fact that its economy is currently experiencing a very unpleasant slowdown. This move will put H&M’s total store count at 700 in 28 markets. Can you believe the world needs so much fashion? Apparently, the retail sector in China hasn’t been hit as hard as other sectors. Hey, if you’re gonna have an economic downturn, you may as well do it in style. But even though revenue for the company surged to 46 billion kronor ( it’s a Swedish company, after all) from 38.8 billion kronor a year before, profits hardly moved, staying at very flat 5.3 billion kronor. Apparently, some of that is being blamed on the strong U.S. dollar, which seems to be responsible for higher garment costs. That poor U.S. dollar gets blamed for everything, I tell you. The rest of the blame goes to August. As in the month. A hot month, like its cooler counterpart, can negatively affect sales. Who knew?

Das boot…

Image courtesy of iosphere/FreeDigitalPhotos.net

Image courtesy of iosphere/FreeDigitalPhotos.net

Just as Volkswagen CEO Martin Winterkorn quit his post yesterday, three more top execs at the German car company will be getting axed in the wake of the company’s escalating emissions scandal. The board doesn’t even care if these execs had knowledge about the “defeat devices.” The fact is they were still at the top of the Volkswagen food chain as the scandal started (and continues) to unravel. Germany’s transport minister got in the action and discovered that, lo and behold, the emissions scandal even affects automobiles in Europe. Not to be outdone, everybody’s favorite German Chancellor Angela Merkel also entered the fray urging the company to get it together. In German, of course. VW is also staring at the wrong end of a potentially $18 billion penalty. And that’s just in the U.S. Criminal inquiries and lawsuits also loom large for the company. Ironically, Volkswagen had a scheduled board meeting to extend WInterkorn’s contract, who in his eight years with the German car company, managed to almost triple profits there. I guess he should make other plans and start updating his LinkedIn profile. No official word yet, but Porsche top dog Matthias Mueller might start slumming it in a Volksswagen as he’s apparently in the running for the top post now at the embattled company.

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