Caterpillar cuts 2012 outlook on weak economy
BY SANDRA GUY Business Reporterfirstname.lastname@example.org October 22, 2012 7:19AM
FILE - In this Wednesday, June 20, 2012, file photo, shows Caterpillar logos on earth moving tractors and equipment in Clinton, Ill. Caterpillar cut its profit and revenue guidance on Monday, Oct. 22, 2012, saying the worlds economic conditions are weaker than we had previously expected. Caterpillar Inc. is the worlds largest construction and mining equipment maker, so its results are watched closely as a sign of where the broader economy is headed. (AP Photo/Seth Perlman)
Updated: November 24, 2012 6:08AM
Slowing customer orders and a limping worldwide economy will mean more production cuts and layoffs, Caterpillar officials said Monday as the company cut its 2012 revenue forecast by an extra $1 billion and lowered its profit guidance.
The Peoria-based company’s 49 percent profit jump for the third quarter included a $273 million one-time boost from the sale of a logistics business, but revenue declined as dealers sought to reduce their inventory and the worldwide economy continued its stall.
The layoffs, which come on top of previously announced partial shutdowns, will generally be short-term, such as a factory shutting down for a week, the company said.
A partial plant shutdown previously announced in Decatur, where mining trucks are manufactured, will take place one week in November and all of December, according to media reports.
No numbers of layoffs have been disclosed.
The lower production will continue until demand from dealers returns to the demand coming from customers, said Mike DeWalt, director of investment relations, during a conference with analysts Monday.
Caterpillar expects little improvement in 2013, with Chief Executive Officer Doug Oberhelman telling analysts that dealers are slowing orders as they seek to lower their inventories and mining customers are delaying some projects amid a slow business environment.
Yet Oberhelman also said machinery demand from China, Brazil and the United States look healthy, and that the company will continue plans to build new plants.
Morningstar analysts Adam Fleck said Caterpillar also can maintain its pricing and even raise prices on its machinery because Caterpillar is the market leader in so many places, said Morningstar analyst Adam Fleck.
Caterpillar reported a profit of $1.7 billion, or $2.54 a share, up from $1.14 billion, or $1.17 a share, a year ago. Its revenue increased 4.6 percent, to $16.45 billion. The company expects 2012 per-share earnings between $9 and $9.25, down from $9.60 a share in earlier reports.