The company also issued a forward guidance range that fell short of Wall Street’s earnings expectations on the lower end. It expects earnings per share for December 2019 in a range between $11.75 and $12.75 versus FactSet consensus expectations of $12.73.
The stock fell more than 5.5 percent in premarket trading Monday. Dow Jones Industrial Average futures fell to new lows after Caterpillar’s comments.
“Our outlook assumes a modest sales increase based on the fundamentals of our diverse end markets as well as the macroeconomic and geopolitical environment,” Caterpillar Chairman and CEO Jim Umpleby said in the press release. “We will continue to focus on operational excellence, including cost discipline, while investing in expanded offerings and services to drive long-term profitable growth.”
The Illinois-based company’s role as a global manufacturing leader can result in big swings to the major U.S. stock indexes. For example, when Chief Financial Officer Brad Halverson said last April that the company’s first-quarter adjusted profits per share would be the “high-water mark,” Caterpillar shares sank 6.2 percent and helped drag the Dow down more than 400 points.
The stock posted its worst session since 2011 on Oct. 23 after it said in its third-quarter earnings that its costs were rising thanks to the ongoing tit-for-tat trade war between the U.S. and China.
“Manufacturing costs were higher due to increased material and freight costs. Material costs were higher primarily due to increases in steel prices and tariffs,” the company said. “Freight costs were unfavorable primarily due to supply chain inefficiencies as the industry continues to respond to strong global demand.”
The company said at that time that it expected the 2018 impact from recently imposed tariffs would fall toward the lower end of a $100 million to $200 million range.
Caterpillar said total sales for its Construction Industries segment were $5.705 billion in the fourth quarter of 2018, a 7.7 percent increase from the same period one year ago. The company reported total sales of $14.3 billion in the fourth quarter and $54.7 billion for the full year; earnings per share of $2.55 fell well short of expectations of $2.99 per share.
Caterpillar will have a earnings call at 11 a.m. ET, when company management will detail its results and 2019 outlook. It will also field questions from Wall Street analysts.
from Update News Zone http://bit.ly/2WoReOt
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