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Caterpillar Forecasts 40% Decline in Mining Sales; Construction Decline 5%

October 24, 2013, 07:02 AM
Filed Under: Corporate Earnings

The company has revised its 2013 outlook and now expects sales and revenues to be about $55 billion, with profit per share of about $5.50.  The previous outlook for 2013 sales and revenues was a range of $56 to $58 billion with profit per share of about $6.50 at the middle of that range. 

"This year has proven to be difficult, with expected sales and revenues nearly $11 billion lower than last year.  That is a 17 percent decline from 2012, with about 75 percent of the drop from Resource Industries, which is principally mining.  We expect Resource Industries to be down close to 40 percent for the full year and Power Systems' and Construction Industries' sales to each be down about 5 percent," said Caterpillar Chairman and Chief Executive Officer Doug Oberhelman.

Not only is mining down from 2012, the demand for equipment has been difficult to forecast.  Orders for new mining equipment began to drop significantly in mid-2012 and have continued at very low levels.  As a result of weak orders and feedback from end users, the sales and revenues outlook provided in January of 2013 included a decline in mining sales.  At that time, based on strong mine production for many commodities, the company's outlook expected that order rates would improve later in 2013.

"Unfortunately, order rates have not picked up much despite continuing strong commodity production.  That has caused us to ratchet down our sales and revenues outlook as we have moved through 2013," Oberhelman said.

To read the full earnings press release, click here.

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