Caterpillar pares bullish 2015 view on "anemic" economy
By Ernest Scheyder
LAS VEGAS (Reuters) - Caterpillar Inc (CAT.N: Quote) cut its 2015 earnings forecast on Monday, becoming the latest heavyweight in Corporate America to sound alarms on the sluggish global economic recovery.
The world's largest maker of earth-moving equipment stopped short of forecasting a global recession, but warned of a bigger-than-expected fall-off in demand for its products over the next few years because of weaker commodity prices.
The deceleration will undermine Caterpillar's expansion in the mining sector, where demand for the company's mega trucks is expected to slow. Equipment sales in Australia and China may also decline.
"We've seen a slowing in economic growth more than we expected," Caterpillar CEO Doug Oberhelman told analysts and reporters in Las Vegas. "We expect fairly anemic and modest growth through 2015."
Oberhelman reduced the earnings forecast for 2015 to $12 to $18 per share, from $15 to $20 per share previously.
The outlook cut was reported minutes before U.S. stock exchanges closed, weighing on the Dow Jones industrial average. In after-hours trading, Caterpillar shares fell more than 2.4 percent to $88.73.
The new forecast comes a year after Caterpillar paid $7.6 billion for mining equipment maker Bucyrus International - the largest deal in its history - and bullishly predicted the deal would help boost earnings to as much as $20 per share by 2015.
Large companies tend not to issue earnings forecasts for so many years into the future. Caterpillar did so partly to reassure those on Wall Street who questioned the timing of the Bucyrus deal while the economy remained weak. Continued...