Caterpillar CEO: Commodities crush hits revenue

July 27 01:24 2015

Caterpillar on Thursday delivered second quarter earnings that matched expectations, but its revenue missed forecasts and the heavy equipment giant cut its full-year sales guidance. Shares of Caterpillar fell 2 percent in premarket trading following the announcement. Along with earnings, the company announced plans to buy back $1.5 billion in common stock in the third quarter. That’s in addition to the $4.2 billion repurchased in 2014.AthensCatPlant

In the absence of compelling acquisitions and little demand for capital expenditures, he said returning cash to shareholders in the form of buybacks makes sense. Caterpillar posted second-quarter earnings of $1.27 per share, down from $1.69 a share in the year-earlier period. Revenue fell to $12.32 billion from $14.15 billion a year ago.

Wall Street had expected Caterpillar to deliver quarterly earnings per share of $1.27 on $12.62 billion in revenue, according to consensus estimates from Thomson Reuters. The company backed its full-year adjusted earnings guidance of $4.70 to $5 per share, but cut its outlook for sales and revenue from its previous forecast by $1 billion to about $49 billion.

“I think it’s a function of a global growth rate of 2 percent to 2.5 percent. For us to drive sales and drive employment, we really need 2.5 percent to 3 percent. We haven’t had that,” Oberhelman said. “I’ve been through many cycles in my 40 years at Caterpillar and it will turn [around] at some point.” Continuing economic weakness in China and Brazil and uncertainty over Greece haven’t helped confidence, Caterpillar said in its earnings statement.