Caterpillar forecasts lower profit, sales in 2016
By Meredith Davis
CHICAGO (Reuters) - Caterpillar Inc (CAT.N: Quote) on Thursday forecast a drop in 2016 sales and profit as the outlook for global mining, drilling and construction activity remained bleak, and posted lower third-quarter earnings.
The world's largest construction and mining company, which last month announced a major restructuring, said slower Chinese economic growth and Brazil's recession dented company revenues as sales in all three of its major business segments fell.
While Caterpillar expects China to be the world's largest construction market and is positive on opportunities there, it said its construction business is down.
"It is going to grow, we have to be there," Caterpillar's Chief Financial Officer Brad Halverson said. "But China is soft and we don’t see any big recovery in it next year."
Despite weaker profits and a slashed outlook, Caterpillar shares rallied after its report was largely consistent with last month’s warning and restructuring announcement.
The stock rose 3 percent to $70.91.
"I think that our outlook for 2015 and our sales guidance for 2016 was pretty much in line with what the market expected. There weren’t any big surprises, and I think the market took some comfort in that," said Mike DeWalt, vice president of finance at Caterpillar.
Caterpillar cut its full-year 2015 earnings per share to $3.70 from a previous outlook of $4.70. Excluding restructuring costs, it cut its 2015 EPS forecast to $4.60 from $5.00. Continued...