Caterpillar sees little change into 2017, cuts sales outlook
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Caterpillar machines are seen at a construction site in New York City, U.S., October 17, 2016. REUTERS/Brendan McDermid
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By Meredith Davis
(Reuters) - Caterpillar Inc (NYSE: CAT) has had a slight increase in aftermarket equipment part sales and dealer quotes to rebuild large mining trucks in recent months, but not enough to call it a sales recovery, company executives said on Tuesday.
The world's largest construction and mining equipment maker posted a third-quarter profit of $283 million, or 48 cents per share, down from a revised $559 million, or 94 cents per share, a year earlier.
Excluding restructuring costs, earnings per share came to 85 cents, exceeding analysts' estimates of 76 cents.
"Really this is the first time in a long time, that's happened. We have not had big numbers, but a little increase," Caterpillar Chief Financial Officer Brad Halverson said in a telephone interview.
While the slight increase in part sales and rebuild quotes hint at a change in customer sentiment, the machinery manufacturer gave an overall downbeat forecast when it reported a lower third-quarter profit.
Revenue fell to $9.2 billion from about $11 billion. Analysts had expected $9.8 billion.
Shares of Caterpillar were down 1.7 percent at $84.53.
Caterpillar said demand for new heavy machinery has suffered because of global economic weakness and an abundance of used equipment.
"When demand goes down, dealers want to hold onto less. So that has put some downward pressure on our sales (to dealers)," Caterpillar Vice President of finance Mike DeWalt said in a telephone interview.
The company also cut its full-year revenue outlook for the second time while increasing its estimate of 2016 restructuring costs.
The company estimated 2016 restructuring costs at $800 million, compared with a previous forecast of $700 million.
So far, it has reduced its global full-time and flexible workforce by 14,100 to 108,800 employees as part of the restructuring plan, which runs through 2018.
The company said it expected construction-related equipment sales for the remainder of 2016 and into 2017 to be lower than previously anticipated.
"Many of our businesses, including mining, oil and gas, rail and construction, are currently operating well below historical replacement demand levels in many parts of the world," Chief Executive Officer Doug Oberhelman said in a statement.
Caterpillar forecast 2016 profit at $3.25 per share, excluding restructuring costs. Analysts were expecting $3.50.
The company said it expected full-year revenue of about $39 billion, down from a prior outlook of $40.0 billion to $40.5 billion.
Last week, Caterpillar said Jim Umpleby, who heads its energy and transportation division, would replace Oberhelman as CEO on Jan. 1. Oberhelman will stay on as executive board chairman until March 31.
(Reporting by Meredith Davis in Chicago; Editing by Lisa Von Ahn and Grant McCool)
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