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Caterpillar Beats Estimates But Lowers Guidance, Blames Downbeat Outlook On China, Strong Dollar And Slow Fed
Caterpillar's stock has gotten pummeled recently, which explains why after posting results that were better than expected the stock has seen a big short squeeze, pushing it up 4% in thin pre-market trading. Of note, the company reported EPS of $2.54 on Expectations of $2.28, and revenues of $17.4 billion on estimates of $17.1 billion, yet it cut its full year revenue guidance from $68-72 billion to $68-70 billion on what it says is a weaker economy and a stronger dollar: "From the time the previous outlook was first established in January of 2012, the U.S. dollar has strengthened versus most currencies around the world. That has negatively impacted the full-year outlook by about $1 billion as sales in currencies other than the U.S. dollar are translating into fewer U.S. dollars. While the world's economic environment is weaker than we had expected, our sales have continued to grow." Yet what is most curious is that even CAT has become schizophrenic with respect to the Fed, in one bullet point saying the Fed's easing has done nothing to "benefit economic growth" yet in another claiming more easing will not come "soon enough to benefit growth in 2012." The Bernanke put is now so pervasive even non-financial companies have to rely on the Chairman getting out of bed at just the right angle and sitting down on the CTRL-P macro.
From CAT's earnings release:
- The U.S. Federal Reserve's balance sheet expansion in the first half of 2010 benefited the economy, but those gains seem to be slowing. Banks are expanding credit at a moderate rate, but money growth is slowing. We have not detected much benefit to economic growth from the central bank's policy of lengthening the maturity of its securities.
- Eventually, we expect the U.S. Federal Reserve will resume expanding its balance sheet, but not soon enough to benefit growth in 2012. We believe modest recovery will continue in the United States, with economic growth slowing to slightly more than 2 percent in 2012.
Those curious if CAT had something to say about China will be satisfied, if not with the answer:
We believe China's economic growth will slow to about 8 percent in 2012.
...
In China, we are lowering production levels and have started to export machines to other regions of the world. However, the construction industry in China is still weak and our dealers are reducing their inventories of new machines, further reducing our shipments. While our inventory of new machines in China increased, the combination of our finished inventory and dealer machine inventory was about flat with the end of the first quarter of 2012. We are working to lower finished inventory, but given the weak construction equipment industry in China it will be a gradual reduction throughout 2012. We are being appropriately cautious—we intend to lower inventory, but are considering our supply chain and are acting in an orderly manner. In addition, we are trying to balance our actions—the industry in China has been weak over the past year, but can move quickly when it turns around.
...
As we began 2012, our expectations for sales in China were higher, and we built substantial new machine inventory in the first quarter to support what is usually a seasonally strong quarter. First-quarter sales were lower than expected, and we ended the first quarter with higher inventory in China. We developed and are executing a plan for an orderly reduction of China inventory that includes lower production, merchandising programs to improve sales and the export of machines from China to other parts of the world.
We remain very positive on long-term industry growth in China and our strategy to grow our business there. Our plans for the remainder of 2012 reflect an orderly ramp down of production that considers our entire supply chain in China. Given the current low rate of sales and the production ramp down, it will likely take the rest of 2012 to reduce inventory to appropriate levels.
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Twist - BAD.
LSAP - GOOD.
China going down....
By most accounts the coal, ore, copper etc are piling up at the ports.
Everything they need to put people to work should the top decide to.
Ill be worried about China when they cant get access to resources, or when nobody seems to want to captain the ship.
If you were Chinese would you rather buy ore at 80 or 200?
ford profit off 57%, pepsi off 27%..anyone see a pattern here...nothing CNBC can't spin: earnings off the lows
CNBC: translation "WHORES"
None of these companies built anything. It was all the government. The government earned it all for them.
Becky Quick makes me want to puke.
Becky Quick makes my dick want to puke.
I wont be gentle with her. Lot of economic and financial frustrations to vent out.
Out of all of them , I think she is the worst. Well maybe not worse than Liarman. Then of course there is Cramer.... Or Bartiromo....the fast money crew ..... Nevermind they all make me want to puke.
I didn't puke on my own. I had help (mostly from the dinner with/happy birthday to the Kenyan banner ads)
more fed debauchery will help them get their obscene bonuses. sickening.
CAT spends a TON of money on Congress - gotta keep them pork construction projects rolling in.
http://www.opensecrets.org/pacs/pacgot.php?cmte=C00148031&cycle=2008
http://www.opensecrets.org/lobby/clientsum.php?id=D000000352&year=2012
Even though it flows through an "expense" line on the P&L, CAT's lobbying dollars actually provide better ROI than any traditional capex project. And, the dollars spent on lobbying help reduce income taxes payable as well.
Hooray lobbying!
Hooray responsibility!
Thank goodness bribery is illegal!
Gasoline consumption down 5% from year ago. http://in.reuters.com/article/2012/07/24/us-usa-gasoline-demand-idINBRE8...
Should also be worth noting that gasoline prices are over 5% Lower than they were a year ago. 5% lower price and 5% lower aggregate demand.
Can't wait to see demand when price is 5% higher than a year ago...shit.
and no BA doesnt channel stuff now do they?
This makes a strong case for going ahead with the project to make a bridge to the Mars.
Now then?
What the fuck they gonna do when them here caterpillars turn into butterflies eh?
They never thought this fucker through properly, seems they may all be cunts when they fly away folks.........
They were stockpiling coal like crazy and had planned to build a ton of nukes (after convincing Westinghouse/Toshiba to give them the complete docs for the couple they bought - Areva turned em down for that, knowing full well they would buy a few, then copy them and build their own)
The big miscalculation is that China thought their customer base would keep buying their crap forever. Well, they drove their customers out of business, so now we can't afford their crap, and they will have production capacity for no customers.
By helping to drive us into depression, Obama has outfoxed the Chinese!
http://www.theblaze.com/wp-content/uploads/2011/10/OFC-620x388.jpg
That's actually quite easy to explain: cheap extra workforce is used to keep electricity low - people now turning wheels manually, keeping up the spin...
SP500 hourly looks like it has one more bouce coming - at/near 1380.
http://bullandbearmash.com/index/sp-500/hourly/
Lots of reports coming in with "higher" earnings on lower revenues (except Caterpillar and Boeing...etc). Future potential looks suspect.
He is a cheerleader.....he has to be...but a little to much frosting on his cake I think....
I'm in a Cat plant now - these guys got some serious cash ....... $tuff going on every where here.
So expecting 8% growth (sold on the story) but cant move stock and have to resort to exporting machines and cutting production... does something seem to not add up with this story? Expecting growth in most other areas other than the CAT machine sales?
So...now CAT can tell the Fed what to do that will help the economy...hahahaha!
To much used equipment for sale---- yes there is a sllooowwww down.
http://www.machinerytrader.com/drilldown/manufacturers.aspx?ETID=1&catid=1032
http://www.machinerytrader.com/list/list.aspx?ETID=1&catid=1049&Manu=CATERPILLAR
http://www.machineryzone.com/
diggem while you can
Markets up World down.
Fuck Caterpillar... they took over one of the best locomotive builder shops in North America, EMD London, Ontario, in 2010 received millions in government grants/tax breaks then closed the plant permanently in February 2012, after failing to obtain demands that workers accept pay cuts as deep as 50 per cent ($35 down to $15-$18).
Oh and FUCK YOU HARPER for not stepping in you globalist scumbag.
I think in 5 years China will have a CAYT that looks exactly like a CAT...works like a CAT..but is cheaper....
I wouldn't buy it.
I've looked at chinese rollforming equipment. Really cheap upfront but when it breaks you are SOL on parts short of fabricating your own. I live in a small town and can drive five miles down the road, order a cat part, and have most anything in 48 hours max without incurring a shipping charge.
You got to build it up with money from the bottom, before you can skim the top for better marginal profits. It's the same game played by tycoons just before the crash of 29. Watch, as the middle class people are the ones payin again.
Long term CAT has more orders than it can fill from gold and silver miners. Buy at bottom of market crash, or buy the miners?