Caterpillar earnings disappoint
Firm seen as indicator of the global economy
Caterpillar reports second-quarter profit growth of 44 per cent but that still disappoints Wall Street.
The firm Friday said it earned $1.02 billion US in net income, or $1.52 per share. That's up from $707 million, or $1.09 per share, a year ago.
Still, analysts expected $1.74 per share, and its shares tumbled nearly seven per cent in morning trading, The stock closed down $6.45, or 5.8 per cent, at $105.15 in trading on the New York Stock Exchange.
Revenue grew 37 per cent to $14.2 billion, easily topping estimates.
The heavy equipment maker, which sells construction machinery all over the world, said it expects the U.S. economy to only grow moderately for the rest of the year, but still bumped up its outlook for the entire year.
Caterpillar predicted 2011 sales between $56 billion and $58 billion. Previously, it predicted sales between $52 billion and $54 billion.
Many investors look to Caterpillar as an indicator of the global economy because of its marketing reach.
The acquisition of mining equipment maker Bucyrus International also cut into profit and weighed down Caterpillar's outlook. Without it, quarterly profit per share would have been $1.72.
Costs grew 34 per cent to $12.6 billion for Caterpillar in the quarter as steel, freight and wage costs all increased.
CEO Doug Oberhelman said that there was softening of growth in China, but that dealer deliveries were up this quarter over the same period last year.
"China is doing a good job of balancing growth and inflation, and our expectations for China remain positive," he said.
Overall, the company predicted 3.5 per cent growth in the global economy in 2011, down from 3.9 per cent last year.
Oberhelman said he believes the current lack of confidence in the U.S. business climate is the biggest impediment to a stronger recovery.
"Lack of clarity on a U.S. deficit reduction plan, trade policy, regulation, much needed tax reform and the absence of a long-term plan to improve the country's deteriorating infrastructure do not create an environment that provides our customers with the confidence to invest," Oberhelman said.
"We're confident that as a country we'll eventually get it right, and we're positioning Caterpillar to be ready when we do."
With files from The Associated Press