By Bob Tita 

Caterpillar Inc. on Friday cut its full-year revenue and profit guidance as sales of its construction and mining equipment fell in all regions.

Depressed global commodity prices and the slowdown in some emerging markets have pared demand for Caterpillar's yellow bulldozers, excavators, mining trucks and engines, and its first-quarter earnings fell shy of expectations that had already been lowered last month.

Caterpillar did report some improvement in the Chinese equipment market and better-than-anticipated orders at a recent big trade show in Europe. However, the company said the recent improvement in some commodity prices may not be "sustainable or sufficient to drive increased demand for equipment" as mining companies remain committed to cutting equipment spending.

Rising volumes of commercial and residential construction in the U.S. typically drive higher demand for building machinery, but Caterpillar's sales of construction equipment in the North America fell 18% during the quarter. The company said demand for new equipment is largely being met by the glut of used machinery pulled from idle frack oil and natural gas fields in North America.

The company now expects revenue of $40 billion to $42 billion for 2016, paring the top end of its forecast from $44 billion. Caterpillar had sales of $47 billion in 2015, and this would mark the fourth year of declining sales.

Sales of machinery and engines dropped 27% for the quarter to $8.8 billion. The engine business was especially weak, plunging 33% on lower sales of engines to the energy industry and slumping sales of railroad locomotives.

Caterpillar expects per-share profit of $3, or $3.70 excluding restructuring costs, down from its previous outlook of $3.50 excluding restructuring expenses.

The company said the lower profit outlook reflects declining sales and higher costs or scaling back operations and its workforce.

For the quarter ended Jan. 30, Caterpillar reported a profit of $271 million, or 46 cents a share, compared with $1.25 billion, or $2.03 a share, in the year-earlier period. Excluding restructuring costs, the company earned 67 cents a share. Analysts were expecting 68 cents a share and revenue of $9.4 billion. Caterpillar's overall revenue, which also includes its financing operation, fell 26% to $9.5 billion.

Write to Bob Tita at robert.tita@wsj.com

 

(END) Dow Jones Newswires

April 22, 2016 11:47 ET (15:47 GMT)

Copyright (c) 2016 Dow Jones & Company, Inc.
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