Caterpillar says Wall Street 'too optimistic' on 2017 profit estimate

Thu Dec 1, 2016 2:13pm EST
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By Meredith Davis

(Reuters) - Caterpillar Inc (CAT.N: Quote), the world's largest construction and mining equipment maker, said on Thursday analysts' earnings expectations for 2017 were "too optimistic" as oil prices remained volatile.

Analysts on average were expecting 2017 revenue of $38 billion and earnings of $3.25 per share, according to Thomson Reuters I/B/E/S.

While the company said analysts' average revenue estimate of $38 billion for 2017 was a reasonable midpoint expectation, it added that it sees significant operating profit headwinds for the coming year.

These include an estimated drop of about $1 billion in sales and $500 million to $600 million more in short-term employee incentive compensation than in 2016. Additionally, Caterpillar Financial profit is expected to be down about $100 million.

The company stopped short of giving any additional guidance on full-year 2017 earnings per share. (

But Caterpillar executives said the company sees no significant rebound in order activity in mining or oil and gas, and North American rail continues to be weak.

The executives said Caterpillar was on track for a $2 billion of period and variable cost reduction for the full year of 2016. A restructuring plan announced in 2015 will continue through 2018.

The company said it was encouraged by the potential of a U.S. infrastructure bill, tax reforms, commodity prices and the recent announcement by the Organization of the Petroleum Exporting Countries (OPEC) to curb production.   Continued...

The CAT logo is seen on back of a Caterpillar excavator machine at a work site in Detroit, Michigan January 25, 2013.   REUTERS/ Rebecca Cook