Commodity prices hit Caterpillar profit — down 25%
Shares on heavy-machinery maker Caterpillar (NYSE:CAT) were down 6.74% Tuesday at 9:36 am ET after the company posted disappointing results for the fourth quarter due to lower prices for copper, coal and iron ore curtailing mining equipment orders.
The world's largest maker of construction and mining equipment, considered a global economic bellwether, also delivered a gloomy outlook for 2015, which chief executive officer Doug Oberhelman qualified as a “tough year” ahead:
“The recent dramatic decline in the price of oil is the most significant reason for the year-over-year decline in our sales and revenues outlook. Current oil prices are a significant headwind for Energy & Transportation and negative for our construction business in the oil producing regions of the world. In addition, with lower prices for copper, coal and iron ore, we've reduced our expectations for sales of mining equipment. We've also lowered our expectations for construction equipment sales in China. While our market position in China has improved, 2015 expectations for the construction industry in China are lower.”
However, the Peoria, Illinois-based company reported fourth-quarter net profit of $757 million, down nearly 25% from $1.03 billion a year earlier.
It also said it expects to post per-share earnings of $4.75 a share on revenue of $50 billion for the year. Analysts polled by Thomson Reuters had projected $6.67 a share in earnings on $55 billion in revenue.
"As we look towards 2015 from an economic perspective, we think there's a reasonable likelihood that world economic growth could improve a bit," noted Mike DeWalt, VP of Strategic Services Division, in a webcast.
The company’s sales in its energy and transportation segment increased 11% to $6.2 billion, but that growth was not enough to offset declines in its mining and construction equipment businesses.