CAT Caterpillar Inc

By Andrew Tangel 

Caterpillar Inc. is due to report third-quarter earnings on Tuesday, just over a week after announcing Chairman and Chief Executive Doug Oberhelman would step down.

The world's largest manufacturer of mining and construction equipment is wrestling with a downturn in the global commodities markets and slowing Asian growth that has weighed on the broader industrial sector. Here's what you need to know:

EARNINGS FORECAST: Wall Street analysts expect earnings per share of 76 cents, according to Thomson Reuters, compared with 62 cents a share, or 75 cents a share excluding restructuring costs, in the third quarter of last year. In July, Caterpillar again pared its full-year outlook to about $2.75 a share, or about $3.55 a share excluding restructuring costs. The company earned $3.50 per share in 2015.

REVENUE FORECAST: Analysts expect $9.9 billion of revenue in the quarter, down 10% from a year earlier. For 2016, Caterpillar said in July it was predicting revenue of $40 billion to $40.5 billion, down about 15%.

NEW LEADERSHIP: Investors may get their first sense of the new era under Jim Umpleby, who is slated to take over as Caterpillar's CEO on Jan. 1. The company has declined to say whether Mr. Umpleby will be on a call with analysts after it releases third-quarter earnings on Tuesday. Nevertheless, Mr. Oberhelman may shed light on the board's decision to divide the CEO and chairman jobs for the first time in 26 years. The split suggests the board wants a faster turnaround of Caterpillar's fortunes, and wants greater accountability at the top.

GLOBAL ECONOMY: Investors are likely to focus on whether the company changes its full-year outlook, as well as providing 2017 guidance. This year is already on track to be Caterpillar's fourth successive year of declining revenue. Caterpillar will offer glimpses into signals of strength--or continued weakness--in the construction, mining and energy industries where its hulking bulldozers, trucks and other heavy machines are put to use. Caterpillar reported bleak September sales on Monday, saying its machine sales world-wide were down 18% from the prior year. Investors will also be looking for any further hit to revenue wrought by a strong dollar and any unfavorable currency translations, such as from the British pound that weakened after Brexit.

FUTURE SHAPE: Caterpillar plans to eliminate 10,000 jobs, about 10% of its workforce, and close or consolidate 20 plants by the end of the 2018. The company had about 100,000 full-time employees at the end of the second quarter, down from 111,200 the previous year. The company has cut more than 5,300 positions so far and announced the closing of a handful of smaller plants. Further restructuring plans may not be announced until Mr. Umpleby outlines his strategy in 2017.

Write to Andrew Tangel at Andrew.Tangel@wsj.com

(END) Dow Jones Newswires

October 24, 2016 11:11 ET (15:11 GMT)

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