Caterpillar lowers its full-year sales outlook

CATERPILLAR SOUNDED a warning call on the state of the global industrial economy by lowering its full-year sales outlook, downgrading its growth projections and warning it could rapidly cut large numbers of jobs if the situation worsened.

It cut the top end of its sales and revenue outlook for 2012 to $68 billion-$70 billion from its prior forecast of $68 billion-$72 billion.

Caterpillar, which generates some two-thirds of its revenue outside of North America, said the strengthening of the dollar would wipe about $1 billion off its balance sheet, while weaker economic growth would reduce its earnings by a further $1 billion.

Doug Oberhelman, chief executive, said he expected “anaemic” global economic growth over the next 12 to 24 months.

The company stressed it was still on course for a year of record profits and revenues, and raised its full-year profit outlook to $9.60 per share from its prior forecast of $9.50. Caterpillar explained its improved profit forecast and lower revenue outlook by saying it was achieving better underlying operating performance.

“Caterpillar’s success in 2012 is occurring despite US construction activity that remains depressed and well below the prior peak, the problems facing euro zone economies and economic concerns in China,” said Mr Oberhelman.

“While we’re expecting a record year in 2012 . . . if it becomes necessary, we are prepared to act quickly as we did in late 2008 and 2009 [when Caterpillar’s global workforce shrank by 35,000 workers – 17 per cent of its staff],” Mr Oberhelman said.

“The good news is, this doesn’t feel like 2008,” the Caterpillar chief said. “Interest rates are low, central banks are prepared to inject more liquidity if needed, and housing is coming off lows, not a peak, and seems to be improving.”

Caterpillar issued its latest outlook as it unveiled record second-quarter results that far exceeded analysts’ expectations.

The company made a net profit of $1.7 billion, or $2.54 per share, up from $1 billion, or $1.52 per share, in the same period last year and above Wall Street forecasts. Revenues were $17.4 billion, up from $14.2 billion last year and ahead of average expectations of about $17.1 billion.