Caterpillar (CAT, quote) is seeing cuts going into a typically busy time of year and are not expected to recover much.
Caterpillar is feeling the effects of the downturn in mining
It’s sad, but another solid company with nothing it can do other than buy back more stock. CEO Oberhelman is more impressed with his cost cutting than anything.
The company’s sales and revenues outlook was cut from 60-68bn to 57-61Bn$ for FY 2013. It’s hard to get excited about these developments, especially with profit outlook cut back to the bottom of the range (7$).
However, the company is pleased with the US housing sector. As well, sales in China were higher in 1Q ’13 than ’12, and machine inventories are getting back to normal from previously bloated levels.
The scary news continues for the mining sector; it remains to be seen whether this is entirely priced into miners at this point. Mining, also known by CAT as “Resource Industries,” will be -50% to 2012 in mining equipment and BUCY sales -15%.
The CAT chief executive said today that mining business is very soft around the world, but we might be at the floor. He said “I’m thinking we are bumping the bottom in mining.” It’s clear the rout in mining is not an overnight event. In fact, he went on to say that miners started cutting capex 1.5yrs ago. What might be scary to think about if you’re a believer in the deflation story is that, by historical standards, commodity prices are actually still quite high, and CAT affirmed that. This tells me it could get much uglier as well…