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Caterpillar Slashes Outlook as Q3 Sales Plunge 16.4%

Tuesday, October 25, 2016 6:41
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Caterpillar logoConstruction and mining equipment giant Caterpillar Inc. (NYSE:CAT) posted disappointing Q3 earnings today and cut its full-year outlook, as weak demand and sales volume continue to weigh on the company’s results.

The Peoria, IL-based company reported adjusted Q3 EPS of $0.85, beating out analyst estimates of $0.76. revenue fell 16.4% from last year to $9.16 billion, however, badly missing Wall Street’s view of $9.88 billion.

CAT said the revenue plunge was largely a result of lower sales volume, as its customer demand wanes due to weak commodity prices and economic weakness in many developing countries.

Looking ahead, Caterpillar slashed its full-year earnings outlook to $3.25 per share, down from a prior forecast of $3.55. On average, Wall Street analysts are looking for $3.53 per share for the year. The company also cut its revenue outlook, now seeing $39.0 billion for the year, down from $40.0 to $40.5 billion previously. For 2017, CAT said its revenue performance will likely be very similar to that of 2016.

Caterpillar Chairman and CEO Doug Oberhelman commented via press release:

“Economic weakness throughout much of the world persists and, as a result, most of our end markets remain challenged… However, there were a few bright spots this quarter… I’m pleased with how Caterpillar has responded and our team’s incredible focus on reducing costs and pulling through profit despite sluggish end markets. In the third quarter, despite a $1.8 billion decline in sales and revenues, our operating profit pull through was significantly better than our target range. Lower variable manufacturing costs of $234 million and lower period costs of $420 million enabled us to offset much of the negative impact from a weak sales environment and continue investment in products and digital capabilities.”

CAT shares fell $0.94 (-1.09%) to $85.05 in premarket trading Tuesday. Prior to today’s report, CAT had surged 26.53%, versus a much smaller 5.4% return in the benchmark S&P 500 index in the same period.


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