Caterpillar cuts 2015 profit outlook as mining spending falls

‘Downside to Budgets’

“Despite some improvement in commodity prices, the global economic prospects don’t instill confidence to increase capital expenditure,” Karen Ubelhart, a Bloomberg Industries analyst, said Sept. 20. “There’s more downside to budgets and equipment cancellations.”

Caterpillar’s profit excluding one-time items will rise 29 percent to $9.55 a share this year, according to the average of 23 analysts’ estimates compiled by Bloomberg. That growth will slow to 8.4 percent in 2013, the estimates show.

The company also forecast yesterday that sales will rise to $80 billion to $100 billion in 2015, from $60.1 billion in 2011. Capital and acquisition spending will be lower in the next three or four years compared with the last few years, Oberhelman said.

There isn’t “another big rash of acquisition opportunities out there,” he said.

GE Plans

That contrasts with General Electric Co., which announced yesterday at MINExpo the creation of a new mining unit. The division is preparing to buy more mining-equipment and services companies and should reach $5 billion in sales “within a few years,” said Lorenzo Simonelli, CEO of GE Transportation, of which the business will be part.

Oberhelman also said Caterpillar expects to be the “market share leader” in China by 2015 at the latest.

The Caterpillar CEO’s comments on growth echo those of Michael Sutherlin, CEO of Milwaukee-based Joy Global Inc., the biggest manufacturer of underground mining machinery. Central- bank actions in China and the U.S. are removing some uncertainty from financial markets and have provided more stability, Sutherlin said in a Sept. 18 telephone interview.

Joy is scheduled to host an analyst presentation today at MINExpo. It may comment on the coal industry and its manufacturing flexibility amid slowing orders, Brian Rayle, a Cleveland-based analyst for Northcoast Research, said in an interview Sept. 18.

Bloomberg News

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