Caterpillar Crashes on Q3 Weakness
Shares of Caterpillar(NYSE:CAT) were sent tumbling to the downside on Wednesday morning following a dismal third quarter report in the morning. The well known industrial giant posted a lower-than-expected quarterly profit while cutting its full-year forecast yet again. Weak demand from mining customers continued to hurt the earnings on the company.
Caterpillar, the world’s largest maker of earth-moving equipment, reported a third-quarter profit of $946 million, or $1.45 a share, down from $1.7 billion, or $2.54 a share, in the third quarter of last year. These results came in well below analyst consensus estimates. Wall Street’s professionals on average expected earnings of $1.66 a share, according to Thomson Reuters. On the top line the company reported a steep drop in revenues. Total sales and revenue fell 18 percent to $13.4 billion.
Mining equipment has historically been Caterpillar’s most profitable product segment, however, sales have been hurt in recent quarters because miners, facing investor backlash and falling metals prices, have halted capital spending, slowed the development of some projects.
In response to the declines, Caterpillar announced it had temporarily stopped some plants, furloughed thousands of salaried and management employees, and reduced its full-time workforce by 3,000 workers during the third quarter. Over the past year, the company has cut 13,000 jobs which equates to roughly 10 percent of the global total.
Without any increase in orders, Caterpillar stated it now expects a full-year 2013 profit of $5.50 a share on sales of about $55 billion, down from an earlier forecast of $6.50 a share on sales of $56 billion to $58 billion. At the time of this writing, shares of the company were to the downside by 5.8 percent to $84 per share. As a result of the company’s large position within the broader markets, the Dow Jones and S&P 500 tumbled as a result.
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