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Caterpillar forecasts lower demand

Caterpillar (NYSE: CAT) has revealed sales “declined modestly” in 2019 and forecast lower demand this year, as economic uncertainty weighs on the leading surface mining equipment manufacturer.
Caterpillar forecasts lower demand Caterpillar forecasts lower demand Caterpillar forecasts lower demand Caterpillar forecasts lower demand Caterpillar forecasts lower demand

Caterpillar’s resource industries segment profit was 35% lower than in 2018

Staff reporter

"We expect continued global economic uncertainty to pressure sales to users in 2020 and cause dealers to further reduce inventories," chairman and CEO Jim Umpleby said.

"We have improved our lead times and remain prepared to respond quickly to any positive or negative changes in customer demand.

"We will continue to invest in services and expanded offerings to advance our strategy for long-term profitable growth, while achieving our Investor Day targets."

Caterpillar's December quarter sales and revenues were US$13.1 billion, an 8% decrease on the previous corresponding period, while full-year sales and revenue were down 2% on the previous year to $53.8 billion.

However the company said the operating profit margin was 15.4% for 2019, compared with 15.2% for 2018.

"In the fourth quarter, strong cost control more than offset lower-than-expected end-user demand," Umpleby said.

The resource industries segment profit was 35% lower than in 2018 while construction's profit was down 22% from the previous year.

Caterpillar's adjusted profit per share rose from $2.55 a year ago to $2.63 for the fourth quarter but fell from 2018's $11.22 to $11.06 for 2019.

The profit per share was $10.74 and the company has provided an outlook range of $8.50-$10 for its 2020 profit per share.

It reported ending the year with an enterprise cash balance of $8.3 billion, after returning about $6.2 billion of capital to shareholders.

Its shares closed down 2.97% on Friday to $131.35, near the midpoint of a 52-week range of $111.75-$150.56, capitalising Caterpillar at $72.6 billion.