Caterpillar Doing Well But Lower Sales Forecast Through Next Year

caterpillarLarge equipment company Caterpillar, Inc has just cut its sales forecast for the fourth time, warning also that next year may just be more of the same struggles. Sluggish growth and low commodity prices contribute to miners and diggers just not ordering as much equipment as in previous years.

Accordingly shares of Caterpillar Inc fell at least 2 percent in premarket trading.

“Economic weakness throughout much of the world persists and, as a result, most of our end markets remain challenged,” explains Caterpillar Inc Chairman and CEO Doug Oberhelman. “In North America, the market has an abundance of used construction equipment, rail customers have a substantial number of idle locomotives and around the world there are a significant number of idle mining trucks.”

He goes on to say that Caterpillar experienced a $1.8 billion decline in sales and revenue, adding that both the construction industry and the company’s machine market position improved in China.

Oberhelman continues, “While we are seeing early signals of improvement in some areas, we continue to face a number of challenges. We remain cautious as we look ahead to 2017, but are hopeful as the year unfolds we will begin to see more positive momentum.”

Overall, the company has lowered its overall 2016 full-year outlook due, as the company says, to a “challenged environment.” In addition, though, the company expects 2017 could be a spitting image of 2016.

As such, Caterpillar now expects revenue for 2016 to reach $39 billion with a profit of $3.25 per share. While this is down from the previous revenue outlook range—$40 billion to $40.5 billion, with earnings of $3.55 per share—the numbers are still solid enough to hold on.

Oberhelman notes, however, “We remain cautious as we look ahead to 2017, but are hopeful as the year unfolds we will begin to see more positive momentum.”

Finally, he concludes: “At some point, and I think we’re getting closer to that point, our business will turn up. It’s a good time for Jim to take over, as I know Caterpillar will deliver even better financial results when key industries begin to improve and get back to mid-cycle replacement demand levels.”

Now, Caterpillar shares have climbed 28 percent over the course of the year and, in fact, is best performer on the 30-member Dow Jones Industrial Average; the Index has gained an overall 4.5 percent.

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