Digging deeper

22 April 2016 By Kevin Allison

The $46 bln maker of earth-moving equipment added a fresh profit warning to a series of stumbles, including buying into mining at its peak and splurging on buybacks when stock prices were high. Boss Doug Oberhelman is turning out to be a poor judge of his own business cycle.

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Caterpillar on April 22 warned that 2016 revenue and profit would be lower than initially forecast as it reported lower-than-expected first-quarter earnings.

The world’s biggest maker of earth-moving and mining equipment and machinery reported net income of $271 million in the three months ended in March, down from $1.3 billion in the first quarter of 2015. Caterpillar said it earned 67 cents per share, excluding restructuring costs, which was short of analysts’ average estimate of 68 cents. First-quarter revenue was $9.5 billion, down from about $12.7 billion in the year-ago period.

Caterpillar said it expected full-year 2016 sales of $40 billion to $42 billion, down from an earlier range of $40 billion to $44 billion. It cut its full-year earnings forecast to $3 per share, or $3.70 per share excluding restructuring costs. That was down from an earlier target of $3.50 per share, or $4 per share excluding restructuring expenses.

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