Shares of Caterpillar (NYSE: CAT) plunged on Wednesday after the company slashed its full-year outlook and posted disappointing third-quarter results.
The company, based in Deerfield, Illinois, blamed the dismal results, in a press release, on a reduction in inventories from dealers. Executives said this weakness could persist due to "global economic uncertainty."
The heavy machinery manufacturer earned $2.66 per share in the third quarter, versus the consensus estimate of $2.88 per share, according to Refinitiv. Revenue came in at $12.758 billion, while Wall Street expected revenue of $13.572 billion.
The company also lowered its full-year earnings per share forecast to a range of $10.59 and $11.09, below the expected $11.70. The company said it now expects fourth-quarter demand to be flat.
The company said dealers decreased inventories by about $400 million in the third quarter, compared to increasing inventories by $800 million in the same period last year.
The outlook does not include a mark-to-market gain or loss for remeasurement of pension and other post-employment benefit plans, which will be excluded from adjusted profit per share in the fourth quarter of 2019 along with any other material discrete items.
"Our volumes declined as dealers reduced their inventories, and end-user demand, while positive, was lower than our expectations," said Caterpillar Chairman and CEO Jim Umpleby.
"We remain focused on executing our strategy and continuing to achieve our Investor Day targets for margin improvement and free cash flow."
Shares dropped $1.52, or 1.1%, to $132.31
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