Caterpillar Cuts 2015 Sales Forecast by $1 Billion
Caterpillar Inc., the largest manufacturer of construction and mining machinery, cut its full-year sales forecast after the U.S. dollar strengthened and said important end-user industries remain weak.
Revenue will be about $49 billion in 2015, down $1 billion from its previous projection, the Peoria, Illinois-based company said in a statement July 23.
Caterpillar also reported a 29% decline in second-quarter net income, while sales for the period missed analysts’ estimates.
“While economic conditions in the United States are modestly positive, the global economy remains relatively stagnant,” CEO Doug Oberhelman said. “Many of the key industries we serve remain weak, and we haven’t seen sustained signs of improvement.”
Caterpillar is selling fewer of its signature yellow diggers and dump trucks to miners amid a deepening slump in prices for copper, coal and iron ore. Sales of engines and generators to the energy industry also have been hurt by the slide in oil and natural gas prices. There’s no end in sight yet, with the Bloomberg News Commodity Index falling this week to a 13-year low.
Caterpillar’s energy, transportation and mining segments accounted for 56% of the company’s revenue last year.
Across the whole of the business, there’s virtually no sign of improvement. On July 22, Caterpillar released figures for retail sales of machinery that showed declines in almost every region and segment. The one exception was a 1% gain in second-quarter retail sales from its resource industries business in Europe, the Middle East and Africa.
The commodities slump entered new territory this week as gold tumbled to its lowest price since 2010. BHP Billiton Ltd., the world’s largest mining company, said July 22 it will cut production of petroleum, copper and coal in its 2016 fiscal year.
Globally, about 3,000 mining machines are unused right now compared with a typical level of 1,500, according to Lawrence De Maria, a New York-based analyst at William Blair & Co.
Second-quarter net income fell to $710 million, or $1.16 a share, from $999 million, or $1.57, a year earlier. Profit excluding one-time items was $1.27 a share, beating the $1.26 average of 20 analysts’ estimates compiled by Bloomberg. Revenues fell to $12.3 billion from $14.2 billion compared with the $12.8 billion average estimate.
