Caterpillar reduced 2012 forecast signals dim outlook for mining firms
The caution sign was the latest in a string of comments from multinational manufacturers, including General Electric Co. and Honeywell International, that the economic recovery remains tenuous and tepid at best.
Caterpillar's retail dealers are selling off inventories, rather than buying new machines, forcing the company to idle some production at plants earlier this year with additional shutdowns coming, executives said on Monday.
“As we're moved through the year, we've seen continued economic weakening and uncertainty,” Chief Executive Doug Oberhelman said in a statement. Caterpillar does not expect the global economy to begin to improve until the second half of 2013, he added. Caterpillar posted better-than-expected third-quarter profit on a rebound in U.S. sales of heavy equipment from a 30-year low. Europe and parts of Latin America remain tough regions for Caterpillar. The weakening euro zone is the “most significant” risk to the company's 2013 outlook, executives said.
Caterpillar's growth is closely linked to global macroeconomic trends, which are now trending “flat-to-down,” said Longbow Research analyst Eli Lustgarten. The company expects sales of mining equipment to slip in 2013 as falling metal and coal prices force companies to pull back on production. Sales of construction equipment should improve next year, especially in emerging markets. And sales of power generators should be flat next year, Caterpillar executives said. The three areas each comprise roughly one-third of the company's sales.
IT was the second time this year that Caterpillar has cut its 2012 forecast. Caterpillar spooked markets at a major industry conference last month, when it looked three years into the future and slashed its earnings forecast for 2015. Oberhelman blamed an “anemic” economic outlook, especial in the mining sector.
SOURCE OF THIS ARTICLE : Business Council of Mongolia
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