Track the companies that matter to you. It's FREE! Click one of these fan favorites to get started: Apple; Google; Ford.



Caterpillar's Sales Plunge on Mining Woes

Not a lot went right for Caterpillar (NYSE: CAT  ) in the third quarter. Revenue was down 18.4% to $13.4 billion as demand for mining equipment around the world slumped and net income dropped 44.3% to $946 million, or $1.45 per share in results reported this morning.  

Management has been surprised by the slow pickup in mining equipment sales throughout the year and that's why results have been consistently below expectations. In today's release, they reduced full-year outlook to earnings per share of $5.50 on $55 billion in revenue versus a previous expectation of $6.50 per share on $56 billion to $58 billion in revenue. Coming into the year, management expected $60 billion to $68 billion in revenue and earnings per share of $7 to $9, so it's been a fast, hard fall for investor expectations.

Orders for mining equipment in the Asia/Pacific region were down 63%, the biggest impact in a disappointing quarter. Miners are cutting down on orders around the globe but emerging markets have been hit more than others. This puts a damper on growth potential for Caterpillar and is why the company is only expecting revenue to be flat next year.

Coming out of the recession, there was pent-up demand for Caterpillar's equipment and when combined with high prices for commodities like oil, gold, and copper, demand soared. But with the global economy growing at a snail's pace, the company is probably seeing a more normalized level of demand this year. That will take some adjustment, but Caterpillar has seen demand fluctuations like this before.

Caterpillar has already been shutting factories and cut its workforce by some 13,000 people, and temporarily laid off thousands of salaried workers. It said it has also cut its capital spending plans for the year.

-- Material from The Associated Press was used in this report.


Read/Post Comments (1) | Recommend This Article (0)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On October 23, 2013, at 10:52 AM, ampezzi wrote:

    everybody have to sell cat...

    so I can buy more and more and more even cheeper...

    like ko, mcd, cvx, ibm, pep, yum...

Add your comment.

Compare Brokers

Fool Disclosure

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2695023, ~/Articles/ArticleHandler.aspx, 9/27/2016 6:50:16 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Today's Market

updated Moments ago Sponsored by:
DOW 18,228.30 133.47 0.74%
S&P 500 2,159.93 13.83 0.64%
NASD 5,305.71 48.22 0.92%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

9/27/2016 4:00 PM
CAT $82.88 Up +0.51 +0.62%
Caterpillar CAPS Rating: ***