Caterpillar's 3Q Net Climbs 49%; '12 View Downgraded

By IndustrialsFOXBusiness

Caterpillar (NYSE:CAT) weighed in on Monday with a 49% leap in third-quarter earnings, but the economic bellwether slashed its 2012 financial targets due to continued global uncertainty.

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Shares of the world’s largest construction equipment maker ticked about 1% lower after the results and gloomier guidance.

Peoria, Ill.-based Caterpillar said it earned $1.7 billion, or $2.54 a share, last quarter, compared with a profit of $1.14 billion, or $1.71 a share, a year earlier.

Excluding one-time items, it earned $2.26 a share, besting forecasts from analysts by four cents.

Revenue rose 5% year-over-year to $16.45 billion, trailing the Street’s view of $16.77 billion. Operating margins expanded to 15.8% from 11.2%.

“We are certainly continuing to see the impact” of “economic and geopolitical headwinds facing the world,” CEO Doug Oberhelman said in a statement. “Even so, we had a record third quarter, and our entire organization is focused on finishing 2012 as the best year for sales and profit in our history.”

Looking ahead, Caterpillar warned it now expects to generate full-year EPS of $9.00 to $9.25, down from $9.60 earlier. Analysts had been calling for EPS of $9.40.

Also, sales are seen coming in at $66 billion, down from $68 billion to $70 billion previously and below the Street’s view of $67.64 billion.

“As we've moved through the year, we've seen continued economic weakening and uncertainty. It's definitely impacting our business with dealers intending to lower inventories and mining customers delaying some projects and reducing orders," Oberhelman said.

Still, Oberhelman said Caterpillar is not predicting a global recession in 2013, instead forecasting similar growth as 2012 with a slightly better second half. Overall, 2013 sales are expected in a range of up 5% to down 5%.

“While there's reason for optimism, and we're not expecting a global recession in 2013, we are prepared and stand ready to take action no matter what happens to the global economy,” Oberhelman said.

The more cautious long-term view comes a month after Caterpillar downgraded its 2015 earnings per share focus to $12 to $18, down from $15 to $20 previously. Sales are seen in the range of $80 billion to $100 billion.

Caterpillar’s shares declined 1.14% to $82.90 ahead of Monday’s opening bell, putting them on pace to extend their 2012 slump of 7%.