Caterpillar Dims Earnings Forecast Thru 2015
Caterpillar Inc. (CAT) has been forced to slash its 2015 earnings forecast as commodity miners and producers equally reduced budget allocations for project developments as a result of the debilitating global fiscal crisis dragging commodity prices down.
With construction activity in the global mining sector showing only modest gains, Caterpillar revised its forecast profit range at $15 to $20 a share to $12 to $18 a share in 2015.
"Caterpillar is forecasting moderate and anemic growth through 2015," Chairman and Chief Executive Officer Dough Oberhelman told analysts Monday during a presentation at the MINExpo industry conference in Las Vegas.
"We've seen a slowing in economic growth that was more than we expected," he said. "We think '13 could look like 2012 in terms of worldwide economic growth.''
The company forecast sales will surge from $60.1 billion in 2011 to $80 billion to $100 billion in 2015.
JPMorgan Chase & Co. had earlier said in a Sept. 21 report that there will be a 14 per cent drop through 2014 in the capital expenditures of global mining companies, from an apex spending of $136 billion this year. BHP Billiton Ltd. had suspended an estimated $68 billion worth of projects. Australian iron-ore miner Fortescue Metals Group Ltd. had likewise pruned by 26 per cent its full-year spending allocation forecast to $4.6 billion.
Caterpillar said it closed down for most of the month of July its main Chinese excavator plant, adding it plans to temporarily close a component plant in Illinois for a week around Thanksgiving and a week around Christmas.
''Despite some improvement in commodity prices, the global economic prospects don't instill confidence to increase capital expenditure," Bloomberg Industries analyst Karen Ubelhart said. "There's more downside to budgets and equipment cancellations."
Bloomberg projections from 23 analysts estimate Caterpillar's profit will jump this year to 30 per cent to $9.62 a share. But eventually in 2013, the spike will slow to 8.9 per cent.
Mr Oberhelman said he sees capital and acquisition spending, compared with the last few years, will turn in lower in the next three or four years.