By Chelsey Dulaney
Caterpillar Inc. on Thursday reported a steeper-than-expected
13% drop in sales as lower oil prices and weakness in the mining
sector dragged down sales for all its major equipment segments.
The Peoria, Ill.-based company also dropped its sales outlook
for the year by $1 billion to $49 billion, citing a strong U.S.
dollar. It backed its profit forecast of $4.70, or $5 a share
excluding certain items.
Caterpillar said it expects the second half of the year to
remain challenging and cited oil prices as a major factor.
"While economic conditions in the United States are modestly
positive, the global economy remains relatively stagnant," said
Chief Executive Doug Oberhelman. "Many of the key industries we
serve remain weak, and we haven't seen sustained signs of
improvement."
Shares fell 3.7% to $76.88 a share in premarket trading.
Caterpillar, the world's largest maker of construction and
mining machinery, has been facing a persistent slump in mining
equipment, sluggishness in construction machinery in much of the
world and a more recent slowdown in its most profitable business,
engines used for such things as generating electricity, pushing gas
through pipelines, running industrial machines and powering trains
and ships.
For the quarter ended June, profit fell to $710 million, or
$1.16 a share, from $999 million, or $1.57 a share, a year earlier.
Excluding restructuring charges, per-share profit fell to $1.27 a
share from $1.69 a share a year earlier.
Sales fell to $12.32 billion from $14.15 billion.
Analysts polled by Thomson Reuters had forecast earnings of
$1.27 a share on revenue of $12.62 billion.
Caterpillar's construction-industry sales fell 18% to $4.44
billion in the quarter, while resource industries sales fell 11% to
$1.99 billion. Energy and transportation equipment sales were down
12% to $4.54 billion.
Currency was also a headwind in the quarter. The weakening of
currencies such as the Japanese yen and Australian dollar are
causing Caterpillar's sales to translate into fewer U.S.
dollars.
Latin America is also weighing on the company. In the quarter,
sales for the region were down 26%.
Caterpillar's order backlog at the end of the second quarter was
$14.8 billion, down $1.7 billion from the first quarter of the
year.
Caterpillar has been working to keep its costs in check as it
faces a weak environment. The company said its total workforce
shrank 3.7% from the prior year to 126,800 employees.
Write to Chelsey Dulaney at Chelsey.Dulaney@wsj.com
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