Strategy

Caterpillar Beats Q4 Estimates, Lowers Outlook

The results "while slightly better than expected, continued to reflect pressure in many of our end markets from weak economic conditions."
Matthew HellerJanuary 27, 2017
Caterpillar Beats Q4 Estimates, Lowers Outlook

Caterpillar reported better-than-expected earnings for the fourth quarter but its guidance for 2017 fell below analysts’ expectations.

The construction and mining equipment manufacturer earned an adjusted 83 cents a share, matching results in the year-earlier period, while revenue fell to $9.57 billion from $11.03 billion.

Analysts had expected Caterpillar to report fourth-quarter earnings of 66 cents per share on revenue of $9.84 billion, according to a Thomson Reuters consensus estimate.

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“Our results for the fourth quarter, while slightly better than expected, continued to reflect pressure in many of our end markets from weak economic conditions around much of the world,” CEO Jim Umpleby said in a news release.

“Our team did a great job in the quarter, as they have all year, aligning our cost structure with current demand while preserving capacity for the future. I’m confident we are focusing on the right areas: controlling costs, maintaining a strong balance sheet and investing in the key areas important to our future,” he added.

For this year, Caterpillar lowered the midpoint of its revenue outlook by $500 million to $37.5 billion, citing the negative impact of a strong U.S. dollar, and forecast adjusted earnings per share of $2.90. The average analysts’ estimate is $3.04.

As Reuters reports, hopes for a rebound in the manufacturing sector amid President Trump’s call to spend $1 trillion over 10 years on building infrastructure have fueled a rally in Caterpillar’s stock since the Nov. 8 election.

But the company said a glut of used construction equipment in North America would continue to hurt sales in 2017, while sales in Africa and the Middle East would remain soft due to the regions’ dependence on oil revenue. Low traffic volume is affecting its rail business while weakness in shipbuilding is expected to hurt marine-related sales, the company said.

Caterpillar’s unadjusted loss, which includes $1.019 billion in restructuring costs as well as other charges, jumped to $1.17 billion, or $2.00 per share, in the fourth quarter, from $94 million, or 16 cents per share, a year earlier.

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