Caterpillar on Monday announced record third quarter sales and profit, but said weaker-than-expected global economic conditions would dampen full-year and 2013 results. Lower demand has caused dealers to postpone new orders in an effort to reduce inventory levels, it said.
The heavy-equipment manufacturer, a leading U.S. exporter, now estimates revenues of about $66 billion this year and profit between $9 and $9.25 per share, down from its earlier estimate of $68 billion to $70 billion in sales and profit of about $9.60 per share.
The cutback in orders has forced the Peoria, Ill., company to temporarily shut down some factories and lay off workers.
“As we've moved through the year, we've seen continued economic weakening and uncertainty. It's definitely impacting our business with dealers intending to lower inventories and mining customers delaying some projects and reducing orders,” Chairman and Chief Executive Officer Doug Oberhelman said in a statement.
Caterpillar now projects world economic growth to be 2.5 percent this year, the weakest growth since 2009 and down from its forecast in January of 3.3 percent expansion.
Growth has been disappointing in the United States and China, while much of Europe is in recession, despite efforts by governments and central banks to spur investment through lower interest rates, it said.
Caterpillar said it expects global GDP to improve to 2.7 percent, which should result in slightly weaker first half sales and a slight improvement in the second half as dealers work off excess inventories and government stimulus programs take hold. Revenue growth could range from 5 percent to negative 5 percent next year, it added.
"While machine deliveries to end users have continued to hold up, our sales will probably remain relatively weak early in 2013 as dealers are likely to continue reducing inventories," Oberhelman said.
Despite the uncertain economy, Caterpillar's third quarter revenue reached $16.45 billion, up 5 percent from the same period in 2011, with profit up 49 percent to $2.54 per share. Profits benefited from a pre-tax gain of $273 million from the sale of a majority interest in its Caterpillar Logistics Services business.
Caterpillar sold a 65-percent stake in CAT Logistics to a private equity firm in August for about $750 million. - Eric Kulisch