Caterpillar Inc hikes 2014 earnings forecast as U.S. construction spending picks up
Caterpillar Inc., the largest maker of building and mining machinery, raised its 2014 earnings forecast for the second time this year as a recovery in U.S. construction spending gathers pace
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Caterpillar Inc., the largest maker of building and mining machinery, raised its 2014 earnings forecast for the second time this year as a recovery in U.S. construction spending gathers pace.
Earnings excluding one-time items will be US$6.20 a share, the Peoria, Illinois-based company said Thursday in a statement, up from an earlier prediction of US$6.10.
Caterpillar also reported second-quarter sales that trailed analysts’ estimates. The shares fell 3% before the start of regular trading in New York.
“There’s a pickup in residential construction and non- residential activity, and that definitely bodes well with Caterpillar’s construction segment,” Matt Arnold, a St. Louis- based analyst with Edward Jones, said by phone yesterday. “North America is the brightest spot.”
U.S. construction spending in May was the highest since December, according to Census Bureau data. Caterpillar was also helped by a rebound in dealer sales of mining machinery in North America, bucking the trend in the rest of the world, where mining companies have cut capital spending in response to surplus coal and metals supplies and lower prices.
Caterpillar’s second-quarter net income rose to US$999 million, or US$1.57 a share, from US$960 million, or US$1.45, a year earlier. Profit excluding one-time items was US$1.69 a share, beating the US$1.52 average of 20 estimates compiled by Bloomberg. Sales dropped to US$14.2 billion from US$14.6 billion, trailing the average estimate of US$14.5 billion.
The company said yesterday that dealer sales of its machinery fell 10% in the quarter, a slower pace of decline than the 12% drop in the three months through May.
For Caterpillar’s resources industries segment, retail machinery sales dropped 38%, compared with a 46% decline in the three months through May, the company said in a filing. For construction industries, machinery sales growth slowed to 3% from 4%.
The decline in sales for energy and transportation accelerated to 10%. For construction industries, sales growth slowed to 3% from 4%.
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