Caterpillar Inc. reported that it expects its first-quarter results to fall below Wall Street expectations. Caterpillar has predicted that its sales for the first quarter of 2016, ended March 31, will come in at $9.3 billion to $9.4 billion. Analysts expected first quarter sales closer to $10.3 billion. Caterpillar said profit for the quarter would be 50 to 55 cents per share, or 65 to 70 cents per share excluding restructuring costs. Analysts predicted profit of 97 cents per share, excluding restructuring.
Caterpillar’s mining product sales is expected to reach $7 billion in 2016, much lower than the $20 billion dollars in sales recorded in 2012. At a recently held conference in London, Mike DeWalt, Caterpillar’s vice president of finance services said, “In 2012, the very peak of the cycle, we shipped about 1,600 large mining trucks. In 2016, we’ll be lucky if we do about 150.” Caterpillar is currently the largest maker of construction and mining equipment in the world.
The announcement from the company has led some to wonder whether the company would still be able to meet its 2016 full-year earnings target. Caterpillar kept its full-year 2016 revenue outlook at about $40 billion to $44 billion and its profit outlook at about $3.50 per share, or $4.00 per share excluding restructuring costs.
The downward shift in the global mining sector has been deeper and longer than previously expected. Right now, that environment shows no signs of recovery. Caterpillar and other companies in the industry continue to deal with weak product demand. In response to the crisis, Caterpillar has recently announced plans to shut factories around the globe and cut up to 10,000 employees by 2018.