Caterpillar is not expecting improvement in the global economy or commodity prices this year.
The giant maker of industrial equipment reported fourth-quarter results on Thursday morning, and lowered its outlook for 2016 sales and revenues.
From the statement:
“The outlook for 2016 sales and revenues does not anticipate improvement in world economic growth or commodity prices. Sales and revenues are expected to be in a range of $40 to $44 billion — a mid-point of $42 billion. The mid-point of the range reflects a decline of about $3.5 billion from last October’s preliminary outlook for 2016 sales and revenues and a year-over-year decline of about 10 per cent.
The decrease from last October’s preliminary outlook is largely a result of continued declines in commodity prices and economic weakness in developing countries.”
For the fourth quarter, Caterpillar topped forecasts for profits, with sales of $11 billion, and earnings per share of $0.74 excluding restructuring costs. According to Bloomberg, analysts had estimated earnings per share of $0.69 and revenues of $11.45 billion.
The stock rose by as much as 4% in pre-market trading.
“Cost management, restructuring actions and operational execution are helping the company while sales and revenues remain under pressure from weak commodity prices and slowing economic growth in developing countries,” said CEO Doug Oberhelman. “We took tough but necessary restructuring actions in 2015 — and they were significant.”
On Monday, analysts at Goldman Sachs downgraded the stock to “Sell” and lowered their price target because of concern that a global industrial slowdown would slam machinery demand.