Cheap Nat Gas and Coal Could Hit Caterpillar (CAT) Right Where It Hurts: Ratings
Tweet Send to a Friend
Get Alerts CAT Hot Sheet
Trade CAT Now!
Softening outlook for heavy equipment sales to the global mining and construction industries could eventually lead to moderately weaker credit metrics for Caterpillar Inc. (NYSE: CAT) and could potentially have the same effect on other companies with similar exposure to these industrial customers, says Fitch Ratings.
Mining, which represents the majority of Caterpillar's Resource Industries segment, generates approximately 30 percent of Machinery and Power Systems revenue. As U.S. coal mining suffers from near-term competition from extremely low natural gas prices, producers are redeploying equipment and cutting capital spending.
“We believe muted demand in the mining industry could temper near-term benefits from Caterpillar's integration of Bucyrus which was acquired last year,” said Fitch.
Other concerns that surround demand for Caterpillar's equipment include slower economic growth in China that has reduced excavator sales by as much as 30 percent to 40 percent, noted the report.
Join StreetInsider.com FREE and get immediately alerted when news breaks on your stocks and other market items - JOIN NOW
*NEW - Download StreetInsider's FREE iPhone and iPad App - Click Here
Mining, which represents the majority of Caterpillar's Resource Industries segment, generates approximately 30 percent of Machinery and Power Systems revenue. As U.S. coal mining suffers from near-term competition from extremely low natural gas prices, producers are redeploying equipment and cutting capital spending.
“We believe muted demand in the mining industry could temper near-term benefits from Caterpillar's integration of Bucyrus which was acquired last year,” said Fitch.
Other concerns that surround demand for Caterpillar's equipment include slower economic growth in China that has reduced excavator sales by as much as 30 percent to 40 percent, noted the report.
Join StreetInsider.com FREE and get immediately alerted when news breaks on your stocks and other market items - JOIN NOW
*NEW - Download StreetInsider's FREE iPhone and iPad App - Click Here
You May Also Be Interested In
- Caterpillar (CAT) April Sales Viewed as Neutral
- Microsoft (MSFT) Flat Into Reveal of Next-Gen Xbox
- UPDATE: Wedbush Downgrades XenoPort (XNPT) to Neutral
Create E-mail Alert Related Categories
Credit Ratings, Insiders' BlogRelated Entities
Fitch Ratings
Login with Facebook
Sign up for StreetInsider Free!
Receive full access to all new and archived articles, unlimited portfolio tracking, e-mail alerts, custom newswires and RSS feeds - and more!
