Caterpillar Says Sales Woes Could Linger--Update
October 25 2016 - 9:14AM
Dow Jones News
By Joshua Jamerson
Caterpillar Inc. said lower-than-expected equipment sales in the
second half of the year could continue into 2017, as the company
reported revenue in its latest quarter remained battered, falling
16%.
Caterpillar shares, which had climbed 9.3% in the past three
months, fell 1.7% to $84.50 in premarket trading.
Caterpillar also cut its earnings view for 2016, now projecting
full-year earnings of $3.25 excluding restructuring costs, compared
with its prior guidance for $3.55 a share. The company earned $3.50
a share in 2015. For revenue, the company now expects $39 billion,
compared with its prior range of $40 billion to $40.5 billion.
Looking ahead to next year, the company said "the balance of
risk, particularly during the first half of the year, is likely on
the negative side." But if commodity prices stabilize or rise,
Caterpillar believes the second half of 2017 could be a bit
rosier.
"While we are seeing early signals of improvement in some areas,
we continue to face a number of challenges," said outgoing chief
executive Doug Oberhelman. The company pointed to no increase in
orders for new equipment amid lower-than-expected construction
equipment sales in the second half of 2016, which the company said
could continue into 2017. Caterpillar also pointed to global
economic uncertainty, such as the Brexit vote.
In addition to the outlook, the company reported revenue for the
third quarter missed Wall Street's views.
The third-quarter results and financial forecasts come a week
after Caterpillar said Mr. Oberhelman would retire as chief
executive at the end of this year and as chairman at the end of
March. He will be replaced Jim Umpleby, who will be first
Caterpillar chief in a quarter-century to run the company without
control over the board.
Over all for the September quarter, the company reported a
profit of $283 million, or 48 cents a share, down from $559
million, or 94 cents a share, a year earlier. Excluding
restructuring costs, earnings per share fell to 85 cents from $1.05
a year ago.
Revenue slid to $9.16 billion from $10.96 billion a year ago.
Analysts predicted $9.87 billion in revenue, according to Thomson
Reuters.
Mr. Oberhelman led the equipment maker to its highest annual
sales ever before overseeing the longest sales decline in the
company's history. He spent his first years as Caterpillar's CEO
plowing billions of dollars into factories to build more of its
familiar yellow machines, moving the company deeper into mining
equipment. The bet backfired when miners began shelving
equipment-buying plans as commodity prices fell. China's growth
slowed, and then oil prices fell, along with demand for related
equipment.
Caterpillar previously said it plans to eliminate 10,000 jobs,
about 10% of its workforce, and close or consolidate 20 plants by
the end of the 2018.
Operating costs fell roughly 14% in the third quarter.
Write to Joshua Jamerson at joshua.jamerson@wsj.com
(END) Dow Jones Newswires
October 25, 2016 08:59 ET (12:59 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
Caterpillar (NYSE:CAT)
Historical Stock Chart
From Aug 2024 to Sep 2024
Caterpillar (NYSE:CAT)
Historical Stock Chart
From Sep 2023 to Sep 2024