Industrial bellwether Caterpillar lowered its profit outlook for the year and posted a bigger than expected decline in third-quarter revenues amid weak demand for construction and mining equipment.
The Illinois-based company cut its full-year earnings forecast to between $10.90 to $11.40 a share, down from its previous outlook of between $12.06 to $13.06 a share. That forecast reflects “modestly lower sales” this year.
Caterpillar, known for its bulldozers, backhoes and other large machinery, said it expects demand to be flat in the current quarter.
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Revenues fell 6 per cent from a year ago to $12.8bn in the penultimate quarter of the year as dealers reduced their inventories. That missed analyst expectations for $13.6bn, according to a Refinitiv survey of analysts.
Shares in the company fell 5 per cent to $127.49 in pre-market trade, having been up more than 5 per cent year-to-date as of Tuesday’s close.
“Our volumes declined as dealers reduced their inventories, and end-user demand, while positive, was lower than our expectations,” said Jim Umpleby, chief executive.
Dealers reduced their machine and engine inventories by $400m in the third quarter, compared with an increase of $800m in the same period a year ago.
The decline in revenues was spread across all its major segments — construction, resources and energy industries. In construction, Caterpillar’s largest segment, revenues edged up in North America supported by road and non-residential building construction. However, they deteriorated in the Asia-pacific region amid competitive pressures in China.
