Cat returns to profit

Caterpillar is back in the black after announcing a second quarter profit of £225m - despite paying out £51.6m in redundancy costs. While the profit is well down on the £668m it made in the same period last year, it is a big improvement on the £68m loss it posted in the first quarter of the year.

Machinery sales in the quarter were 49% lower than in 2008 with Europe hardest hit, off by some 61%. Engine sales also struggled, down by 32% world-wide and 36% in Europe.

To counter the downturn Cat has cut the inventory by £486m, knocked £177m from the sales, administration and R&D costs, and reduced the workforce by 15,000 (despite taking on another 5,000 employees through increasing its share in Cat Japan).

It predicts full-year sales to be in the region of £19.5bn to £21.9bn but redundancy costs of £426m will restrict profit to between £152m and £562m.