Caterpillar Misses Estimates on Weakening Construction
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Caterpillar Inc. posted a third-quarter profit that missed analysts’ expectations as the machinery producer grappled with weakening demand in construction around the world.
The U.S. maker of iconic yellow industrial machines reported adjusted per-share earnings of $5.17 on Oct. 30, missing the $5.34 average estimate of analysts polled by Bloomberg. Caterpillar is viewed as a bellwether for the economy, with its heavy equipment deployed at construction sites, mining operations and energy projects across the globe.
The Irving, Texas-based company also warned investors that it now expects 2024 full-year sales and revenue to be “slightly lower” than it expected during its prior earnings call. Shares fell as much as 6.3% during premarket trading in New York.
Earnings by Caterpillar, one of the world’s biggest producers of heavy machinery, come amid uncertainty around the November election in the U.S., the company’s largest market, as well as growth concerns in China.
Sales of construction equipment, Caterpillar’s biggest business segment, dropped 9% from the same period a year ago on lower sales volumes of machines to customers and lower prices, the company said. North America along with the Europe, Africa and Middle East region were especially weak, with each geographical segment seeing revenue decline about 11% and 15%, respectively. Sales in the segment to the Asia-Pacific region dropped 12%.
The company reported that mining equipment revenue fell about 10%, also mainly due to lower sales volumes. Energy and transportation was a bright spot, with the segment seeing a 5% boost in sales.
Analysts had noted the company would likely see sustained strength in oil and gas, and transportation, helping to somewhat offset an expected weakness in construction. Muted economic conditions in industrial sectors through the third quarter provided little positive momentum outside aerospace, data center expansion and electrification, according to analysts at Jefferies Financial Group Inc.
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