Cat Revises 2016 Sales and Revenues Outlook

Company lowers original 2016 expectations due to little improvement in global economic growth.

Caterpillar announced it does not anticipate the world’s economic growth or commodity prices to improve in 2016 and has revised its earlier outlook, dropping yearlong 2016 expectations by 10 percent. With sales and revenues expected to be in the range of $40 to $44 billion, Cat sees a decline of $3.5 billion from its October 2015 preliminary outlook.

The news came as the company announced 2015 financial results. Full year sales and revenue were down 15 from 2014 to $47.011 billion, and 4Q sales and revenue came in at $11.0 billion, down from $14.2 billion in 4Q 2014.

Cat CEO Doug Oberhelman said the company does not anticipate significant improvement in the world economy and is expecting world GDP growth in 2016 to be similar to 2015 at about 2.5 percent. “While economic growth is expected to continue to be weak, but stable, there are certainly risks. Political conflicts and social unrest continue to disrupt economic activity in parts of the world, particularly the Middle East. The Chinese government’s push for structural reform has slowed growth and increased volatility, and U.S. monetary policy could temper business confidence. In addition, commodity prices, oil in particular, have declined substantially.  Further declines in commodity prices could negatively impact 2016 financial results.”

Earlier this week, analysts at Goldman Sachs downgraded Cat stock to “Sell” and lowered their price target because of concern that a global industrial slowdown would depress machinery demand.

Caterpillar’s report can be read here:

Source: Caterpillar

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