Caterpillar Says 2017 Could Add to String of Lower Sales -- WSJ

By Andrew Tangel 

Caterpillar Inc. said 2017 could bring a fifth straight year of lower revenue amid a protracted slump in commodities and global demand for its heavy equipment.

The company said on Thursday that a consensus Wall Street estimate of $38 billion in sales next year was a "reasonable midpoint." The world's largest maker of construction and mining equipment previously said revenue wouldn't be "significantly different" from the roughly $39 billion expected this year.

Analysts' estimates for a per-share profit of $3.25 next year excluding restructuring costs were "too optimistic considering expected headwinds, " Caterpillar said.

Trading in Caterpillar's stock was briefly halted Thursday as investors reacted to the company's presentation at an analyst conference. On the day, the shares rose less than 1% to $96.24.

Among looming concerns, the company cited volatile and low oil prices; weakness in North American demand for construction equipment; and sluggish European growth in the wake of the U.K.'s vote to leave the European Union.

Caterpillar executives flagged signs for optimism, too.

An expected boost in infrastructure spending during Donald Trump's presidency could lift the company's fortunes as construction companies purchase heavy machines to build roads and bridges. But Amy Campbell, Caterpillar's director of investor relations, said the company doesn't expect much impact next year.

Rebounding prices for commodities such as iron and copper could also help boost demand for equipment, though Caterpillar executive Denise Johnson said there is no evidence yet of "any tangible machine sale increases for Caterpillar."

Caterpillar's sales performance has lagged in recent years as miners shelved equipment-buying plans as metals prices fell. Oil prices also dropped, along with demand for related equipment.

Peoria, Ill.-based Caterpillar has been reducing its workforce and closing or consolidating plants around the world.

Ms. Johnson said Caterpillar has reduced its head count by more than 15,000 positions over the last two years. The company had 97,100 full-time employees at the end of the third quarter.

--Joshua Jamerson contributed to this article.

Corrections & Amplifications: Caterpillar Inc. expects "little impact" in 2017 from any infrastructure bill passed into law by President-elect Donald Trump. An earlier version of this article incorrectly stated the bill would have little impact in 2016. (Dec. 1, 2016)

Write to Andrew Tangel at [e-mail]

(END) Dow Jones Newswires

December 02, 2016 02:47 ET (07:47 GMT)

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