Caterpillar (CAT) Misses Q4 EPS by 20c; Guides FY15 EPS Well Below the Street

Caterpillar (NYSE: CAT) reported Q4 EPS of $1.35, $0.20 worse than the analyst estimate of $1.55. Revenue for the quarter came in at $14.24 billion versus the consensus estimate of $14.18 billion.

Caterpillar sees FY2015 EPS of $4.75, versus the consensus of $6.57.

2015 Outlook

We expect world economic growth to only improve modestly in 2015. The relatively slow growth in the world economy and continued weakness in commodity prices—particularly oil, copper, coal and iron ore—are expected to be negative for our sales. We expect sales and revenues in 2015 to be about $50 billion. To provide a better understanding of our expectations for 2015 profit, we are providing our outlook with and without anticipated restructuring costs. Over the past two years, we have undertaken restructuring activities designed to lower our long-term cost structure. Additional restructuring actions are anticipated in our outlook for 2015. In total, we expect the cost of these restructuring actions in 2015 to be about $150 million or about $0.15 per share. Our profit outlook for 2015 is about $4.60 per share, or $4.75 per share excluding restructuring costs.

"The recent dramatic decline in the price of oil is the most significant reason for the year-over-year decline in our sales and revenues outlook. Current oil prices are a significant headwind for Energy & Transportation and negative for our construction business in the oil producing regions of the world. In addition, with lower prices for copper, coal and iron ore, we've reduced our expectations for sales of mining equipment. We've also lowered our expectations for construction equipment sales in China. While our market position in China has improved, 2015 expectations for the construction industry in China are lower," Oberhelman said.

"While we are, without a doubt, facing a tough year in 2015, we're driving cost management through additional restructuring actions and continued operational improvements gained from our focus on Lean Management. While 2015 will be difficult, the work we've done to improve our cost structure, market position and quality will position us for better results when the world economy and the key industries we serve improve," Oberhelman added.

For earnings history and earnings-related data on Caterpillar (CAT) click here.

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