Michael Allan McCrae | October 22, 2012
Industrial and economic bellwether, Caterpillar (NYSE:CAT). threw cold water on the world’s economic recovery by lowering its sales growth outlook to a four-year low, while announcing its Q3 earnings results on Monday.
The company did have a good quarter. Sales and revenues were a little over $16.4 billion and profit in the quarter was $2.54 a share, making it the best quarter in the company’s history. Mining was also up 13% from last year. However this year’s revenue will be around $9 to $9.25 a share, down from an expected $9.41 a share. Next year’s revenue will be about the same as 2012’s revenue, plus or minus 5%.
In a conference call, Chairman and Chief Executive Officer Doug Oberhelman said the slowdown is everywhere.
“. . . from a product standpoint its fairly widespread across construction mining and power systems and from a geographic standpoint its also spread across the globe.”
Oberhelman also attributed the slowdown to a build up in inventory levels at its dealers, due significantly improved delivery times.
Two-thirds of the outlook decline is due to construction and the other third split between power systems and mining. Oberhelman said the company is currently shutting down plants to reduce production levels.
While he noted there has been credit easing around the world, the company does not expect any recovery to kick in until mid-2013.
He expects the mining segment to be down somewhat in 2013.
“Lower metal and core prices and the increasing operating cost have heard profit margin at many mining companies,” said Oberhelman.
“That profit pressure combine was economic and certainty and slow growth has resulted in mining companies to delay in some investment. Although metal prices have recently improved, we expect mining companies will reduce capital spending in 2013 and sales of mining equipment will decline.” – Mining.com