CAT Doesn't Bounce On Big Miss And Forecast Cut

Caterpillar's presence on these pages, for all the wrong reasons, continues.

Yesterday we warned that the bad news involving the firm, already plagued by a spate of operational and management missteps, will start coming fast and furious as the realization that CAT is the Dow's biggest dog dawns on every GETCO algo, and likely lead to a major drop in the stock price. Some 24 hours later, and a few moments ago, we got the first confirmation of this when the company reported dreadful results despite numerous advance warnings that the future is certainly not bright, with an EPS print of $1.45, far below the $1.68 expected, revenues of $14.62 billion below expectations of $14.88 billion, but it was the forecast cut that really hurt the stock and is pushing it well lower in pre-market trading this morning.

From the press release:

We have revised our outlook for 2013 to reflect sales and revenues in a range of $56 to $58 billion, with profit per share of about $6.50 at the middle of the sales and revenues outlook range.  The previous outlook for 2013 sales and revenues was a range of $57 to $61 billion, with profit per share of about $7.00 at the middle of the sales and revenues outlook range.


"Overall end-user demand is similar to our previous outlook, but we now expect a more significant reduction in dealer machine inventory.  That's the main reason for the reduction in the sales and revenues outlook.  During the second quarter, dealers increased their utilization of inventory from our product distribution centers, which allows them to meet customer demand with less inventory.  With the sharp reduction in dealer inventory and the decline in mining, 2013 is turning out to be a tough year and we've already taken action to reduce costs.  During the first half of the year, we've had temporary factory shutdowns, rolling layoffs throughout much of the company, reductions in our flexible workforce, and we've reduced discretionary and program costs.  While we've taken significant action already, we will be taking additional cost reduction measures in the second half of 2013," said Oberhelman.

Who could have possibly foreseen this? Perhaps anyone who saw our chart from yesterday showing the recession implied in CAT sales...


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