Caterpillar Machine Sales Decline for First Time Since 2010
(Updates with closing share price in eighth paragraph.)
Jan. 25 (Bloomberg) -- Caterpillar Inc., the world’s biggest maker of construction and mining equipment, reported the first decline in retail machine sales in more than 2 1/2 years after a slowdown in Asian demand.
Global machine sales in the three months through December fell 1 percent compared with the same period a year earlier, the Peoria, Illinois-based company said in a filing today. It saw a 7 percent drop in the Asia-Pacific region and a 6 percent decline in North America, while other regions posted gains.
Sales have slowed with rising machinery inventories and excess manufacturing capacity in China, undermining the growth experienced since Caterpillar Chairman and Chief Executive Officer Doug Oberhelman took the helm in 2010. The company, an economic bellwether, idled production in some plants last year and in October forecast 2013 sales will be 5 percent lower to 5 percent higher than 2012.
The last time Caterpillar reported a decline in the numbers was for the three-month period through April 2010, according to data on the company’s website. Caterpillar also said today that global power-system sales fell 2 percent.
“These are material changes,” Andrew Casey, a Boston- based analyst for Wells Fargo Securities LLC who rates the shares hold, said today in a report. “We expect a wider miss and lower 2013 guidance” when Caterpillar reports earnings on Jan. 28, he said.
Casey lowered his fourth-quarter earnings estimate for Caterpillar to $1.45 a share from $1.66 earlier and his 2013 estimate to $8 a share from $8.20 a share. Analysts estimate earnings of $1.70 a share in the quarter and $8.55 for the full year, according to average estimates compiled by Bloomberg.
The company said last week that it will report an 87-cent- a-share charge in the fourth quarter for a writedown on a Chinese acquisition, and offer its first guidance for 2013 before the start of trading on Jan. 28.
Caterpillar fell 1.1 percent to $95.58 at the close in New York. The shares have increased 6.7 percent this year.
Moderate demand and Caterpillar’s efforts to lower production to reduce inventory and “relatively subdued expectations” from U.S. construction and power generation dealers also contributed to his estimate reduction, Casey said.
U.S. demand in the last three months of 2012 was affected by political uncertainty following the November presidential election and the debate on how to avert $600 billion of tax increases and cost cuts, Ted Grace, a Boston-based analyst for Susquehanna Financial Group, said today in a phone interview.
Caterpillar also had a “tough” year-ago comparison because its sales were picking up rapidly in 2011 and 2010, he said. Susquehanna is a market-maker for Caterpillar shares.
--Editors: Steven Frank, Charles Siler