Caterpillar shares slump on sales warning as machinery demand cools
Expect Q2 hit on changes in dealer inventories - CFO
Sales miss estimates as Europe, China weakness weighs
Shares fall 7%
Adds CEO, CFO comments, details on inventories
By Deborah Mary Sophia
April 25 (Reuters) -Caterpillar CAT.N on Thursdaywarned of a sales drop in the current quarter as volumes take a hit from dealers tightening equipment inventories, sparking worries that a months-long boom in machinery demand may be coming to an end.
Shares of the global economy bellwether slumped 7% in morning trade as it said end-user sales of its machines was weaker than planned. The stock had gained about 23% for the year so far as of Wednesday's close and hit a record high earlier in April.
Caterpillar reported weak construction equipment sales in all regions except North America, whereconstruction demand is expected to stay healthy forthe rest of the year thanks to the U.S. government's $1 trillion infrastructure law.
Still, that was not enough to offset a slump in demand in Europe and prolonged weakness in China, where economic uncertainties have weakened construction activity, prompting a cutbackin production of certain machines.
"We've been pretty disciplined about making sure that we have cut production like, for example, in excavators ... where we do see softness in the market," Caterpillar CFO Andrew Bonfield said.
Sales at Caterpillar's construction equipment business, which makes its ubiquitous yellow excavators, fell 5% in the first quarter, while its segment that caters to natural resources industries reported a sales decline of 7%.
"I do think we have to kind of re-evaluate and think through what execution would look like. (Machines sales) came in a bit weaker and that doesn't give me great confidence as we head through the year ... we definitely are walking away with more questions," M Science senior analyst Alex Prudhomme said.
The Texas-based companyforecast roughly flat sales for the year.
Still, Caterpillaris banking on higher prices and flattening manufacturing costs to pad margins in the second quarter. Its first-quarter adjusted profit of $5.60 per share surpassedestimates of $5.14, according to LSEG data.
DEALER INVENTORY CONCERNS GROW
Coming off of a strong 2023 where supply chain concerns and soaring demand prompted dealers to bulk up on heavy equipment, U.S. machinery makers are now seeing a moderation in product stocking at dealers, forcing them to tighten their inventories.
Caterpillar said dealerinventories for machines grew a higher-than-expected$1.1 billion in the quarter due to sales to end-users being "modestly lower" than it had anticipated.
Its order backlog increased just $400 million on a sequential basis, but executives said they were confident that end-market demand would be stable this year.
"Dealer inventory is comfortably within what we consider a typical range, so we are not concerned about it," CEO Jim Umpleby told analysts on a post-earnings call.
Still, with investors zeroing in ondealer inventories, Caterpillar's results dragged shares of its rivals Deere DE.N and CNH Industrial CNHI.N down more than 1% onThursday.
For the first quarter ended March 31, Caterpillar'srevenue fell slightly to $15.80 billion, missing estimates of $16.04 billion.
Reporting by Deborah Sophia in Bengaluru; Editing by Saumyadeb Chakrabarty and Devika Syamnath
免責聲明: XM Group提供線上交易平台的登入和執行服務，允許個人查看和/或使用網站所提供的內容，但不進行任何更改或擴展其服務和訪問權限，並受以下條款與條例約束：（i）條款與條例；（ii）風險提示；（iii）完全免責聲明。網站內部所提供的所有資訊，僅限於一般資訊用途。請注意，我們所有的線上交易平台內容並不構成，也不被視為進入金融市場交易的邀約或邀請 。金融市場交易會對您的投資帶來重大風險。
所有缐上交易平台所發佈的資料，僅適用於教育/資訊類用途，不包含也不應被視爲適用於金融、投資稅或交易相關諮詢和建議，或是交易價格紀錄，或是任何金融商品或非應邀途徑的金融相關優惠的交易邀約或邀請。
本網站的所有XM和第三方所提供的内容，包括意見、新聞、研究、分析、價格其他資訊和第三方網站鏈接，皆爲‘按原狀’，並作爲一般市場評論所提供，而非投資建議。請理解和接受，所有被歸類為投資研究範圍的相關内容，並非爲了促進投資研究獨立性，而根據法律要求所編寫，而是被視爲符合營銷傳播相關法律與法規所編寫的内容。請確保您已詳讀並完全理解我們的非獨立投資研究提示和風險提示資訊，相關詳情請點擊 這裡查看。
