Caterpillar Says 2017 Could Add to String of Lower Sales -- WSJ
December 02 2016 - 2:02AM
Dow Jones News
By Andrew Tangel
Caterpillar Inc. said 2017 could bring a fifth straight year of
lower revenue amid a protracted slump in commodities and global
demand for its heavy equipment.
The company said on Thursday that a consensus Wall Street
estimate of $38 billion in sales next year was a "reasonable
midpoint." The world's largest maker of construction and mining
equipment previously said revenue wouldn't be "significantly
different" from the roughly $39 billion expected this year.
Analysts' estimates for a per-share profit of $3.25 next year
excluding restructuring costs were "too optimistic considering
expected headwinds, " Caterpillar said.
Trading in Caterpillar's stock was briefly halted Thursday as
investors reacted to the company's presentation at an analyst
conference. On the day, the shares rose less than 1% to $96.24.
Among looming concerns, the company cited volatile and low oil
prices; weakness in North American demand for construction
equipment; and sluggish European growth in the wake of the U.K.'s
vote to leave the European Union.
Caterpillar executives flagged signs for optimism, too.
An expected boost in infrastructure spending during Donald
Trump's presidency could lift the company's fortunes as
construction companies purchase heavy machines to build roads and
bridges. But Amy Campbell, Caterpillar's director of investor
relations, said the company doesn't expect much impact next
year.
Rebounding prices for commodities such as iron and copper could
also help boost demand for equipment, though Caterpillar executive
Denise Johnson said there is no evidence yet of "any tangible
machine sale increases for Caterpillar."
Caterpillar's sales performance has lagged in recent years as
miners shelved equipment-buying plans as metals prices fell. Oil
prices also dropped, along with demand for related equipment.
Peoria, Ill.-based Caterpillar has been reducing its workforce
and closing or consolidating plants around the world.
Ms. Johnson said Caterpillar has reduced its head count by more
than 15,000 positions over the last two years. The company had
97,100 full-time employees at the end of the third quarter.
--Joshua Jamerson contributed to this article.
Corrections & Amplifications: Caterpillar Inc. expects
"little impact" in 2017 from any infrastructure bill passed into
law by President-elect Donald Trump. An earlier version of this
article incorrectly stated the bill would have little impact in
2016. (Dec. 1, 2016)
Write to Andrew Tangel at Andrew.Tangel@wsj.com
(END) Dow Jones Newswires
December 02, 2016 02:47 ET (07:47 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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