The global economic picture hasn’t gotten brighter in the past month. Brazil’s economy is recovering more slowly than expected from a contraction last year and economists in the latest central bank survey lowered their 2012 growth estimates for the 10th straight week. Spain said July 20 that its recession will extend into 2013.
China’s economic expansion may cool for a seventh straight quarter to 7.4 percent in the three months to September, Song Guoqing, a member of the People’s Bank of China monetary policy committee, said last week. The Chinese excavator market is down 38 percent so far this year, according to estimates from William Blair.
Jim Dugan, a Caterpillar spokesman, declined to comment.
While North America remains Caterpillar’s biggest market, accounting for 36 percent of revenue in 2011, Asia and emerging nations have become increasingly important for the company. A decade earlier, about half of Caterpillar’s revenue was generated in the U.S.
Chinese companies are emerging as challengers to Caterpillar, Oberhelman said July 17 at a conference in Aspen, Colorado.
Caterpillar fell 0.2 percent to $81.43 at the close in New York. The shares have dropped 23 percent in the past year.
Caterpillar isn’t alone in being affected by macroeconomic uncertainty. Jefferies last week also cut its ratings on U.S. companies including tractor maker CNH Global NV, electrical- equipment manufacturer Eaton Corp., and Parker Hannifin Corp., a producer of air-conditioner components.
U.S. exporters are also grappling with a stronger dollar. The euro has fallen 16 percent against the dollar in the past 12 months while the British pound has dropped 4.8 percent.
Other U.S. manufacturers have reduced their guidance. Cummins Inc., a U.S. truck-engine and power-generator maker, slumped 8.9 percent on July 10 after saying 2012 revenue will be in line with last year, ditching an earlier forecast of a 10 percent increase.
Joy Global Inc., a Milwaukee-based mining-equipment maker, on May 31 lowered its full-year earnings guidance. As well as citing a contraction in the U.S. coal industry, Joy said global uncertainty is keeping customers cautious about new projects.
Commodity prices, as measured by the Standard & Poor’s GSCI Spot Index of 24 raw materials, have declined 12 percent from this year’s peak in March.
Caterpillar’s U.S. dealers anticipate 2012 revenues will rise about 10 percent, less than in a previous survey and the 16 percent mid-point of Caterpillar’s own forecast, Brian Rayle, a Cleveland-based analyst for Northcoast Research who has a hold rating on the shares, said in a July 19 report.
Dealers historically have forecast more conservative sales growth than Caterpillar’s North American businesses report, Rayle said.
“The moderating growth outlook from dealers, which is consistent with the slowing growth being reported in a number of Caterpillar’s end markets, is evidence of the relative weakness that the company is currently working through,” Rayle said.
Copyright 2014 Bloomberg. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.