Caterpillar (CAT) Chief Executive Doug Oberhelman will retire after a tumultuous few years that saw the company’s sales rise to the highest in its history before declining amid falling commodity prices.
The company said Oberhelman, who has been chief executive since 2010 but an employee of the company for more than four decades, will retire effective March 31. Caterpillar in 2012 reported the highest sales and revenue in its 91-year history. Since then, however, commodity prices dropped amid oversupply and slack demand, hurting the maker of mining and construction equipment.
Caterpillar, which will report third-quarter earnings on Oct. 25, said in July that second-quarter sales totaled 10.3 billion, down from $12.3 billion during the same quarter a year earlier. Profit fell to $0.93 a share from $1.31 per unit, the company said. Restructuring costs were expected to come in higher than initially forecast due to workforce reductions. Headcount fell to about 100,000 at the end of the second quarter from 111,000 the prior year.
Revenues in the full year in April were forecast by the company from $40 billion to $42 billion while profit was seen at $3 to $3.70 a share. The company said in July that world economic growth was “subdued” and insufficient to drive improvements in the industries and markets it serves. Commodity prices stabilized, Caterpillar said, but at low levels. During Oberhelman’s tenure, quarterly dividends rose 83%, market positions for machines has improved and the company has been granted more than 7,000 patents.
“During the last four years, Caterpillar has faced unprecedented global economic conditions that have significantly impacted the industries served by our customers, as those industries and economic growth in many regions around the world have slowed or severely contracted,” Oberhelman said in a statement. “We have improved our market position and grown our field population. Our product quality is at historically high levels, and I believe we are leading the industry in digital capabilities. I am confident that Caterpillar is stronger than ever, with product quality, power, technology and innovation that is the envy of our competitors.”
Jim Umpleby, a group president in charge of energy and transportation who’s been with the company for 35 years, will take over as CEO and will join the company’s board effective Jan. 1, Caterpillar said. Umpleby started at Caterpillar subsidiary Solar Turbines Inc. in 1980, lived in Asia from 1984 to 1990 and was named president of Solar Turbines in 2010. In 2013 he was named to his current position.
The company also said that Ed Rust, the former chief executive of State Farm Mutual Automobile Insurance Co. and the current presiding director of Caterpillar’s board, will remain on the board but will no longer be presiding director. Dave Calhoun, senior managing director and head of private equity portfolio operations at The Blackstone Group and current member of Caterpillar’s board, will assume the rose of non-executive chairman.