Caterpillar Gives Strong Profit Outlook
January 28 2016 - 8:21AM
Dow Jones News
By Chelsey Dulaney
Caterpillar Inc. on Thursday gave a strong profit outlook for
2016, even as the company cut its sales guidance as it struggles
with weak demand for its equipment used in mining and oil
drilling.
The Peoria, Ill., maker of heavy equipment and engines also
reported better-than-expected adjusted earnings for its fourth
quarter, though its revenue missed expectations.
Shares rose 4.6% to $61 a share in premarket trading.
Caterpillar said it now expects its revenue to fall by about 10%
to a range of $40 billion to $44 billion. In October, the company
had forecast a 5% sales decline for 2016, with lower sales of
mining equipment accounting for two-thirds of the damage. The
decline would mark its fourth straight year of lower sales, a
record for the company.
Still, Caterpillar forecast earnings of $4 a share for 2016
excluding restructuring charges. Analysts polled by Thomson Reuters
had forecast $3.48 a share in adjusted earnings.
Caterpillar is facing tough conditions across a number of its
markets. Weakening economic growth in the U.S. is driving down
construction activity, while lower gas and oil prices have pulled
down sales of Caterpillar machinery and engines used at frack well
sites in North America.
A dismal economy in Brazil and weaker economic growth in China
have choked sales in two of Caterpillar's key overseas markets.
For the fourth quarter ended Dec. 31, Caterpillar swung to a
loss of $87 million, or 15 cents a share, compared with a
prior-year profit of $757 million, or $1.23 a share.
Excluding restructuring costs, the company reported earnings of
74 cents a share. Analysts polled by Thomson Reuters had forecast
69 cents a share in earnings.
Revenue, including revenue from financing, tumbled 23% to $11.03
billion. Analysts had forecast $11.43 billion in revenue.
Write to Chelsey Dulaney at Chelsey.Dulaney@wsj.com
(END) Dow Jones Newswires
January 28, 2016 08:06 ET (13:06 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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