Caterpillar says the world's economy is weaker than it thought,and it doesn't expect growth to pick up untilthe second half of nextyear.
The company on Monday cut its 2012 revenue and profit guidance, and said next year won't be much better.
Caterpillar makes the yellow-painted excavators, heavy tractors, and other construction equipment often seen on road-building projects. It's the world'slargest maker of construction and mining equipment, and also makes engines, so its results are watched closely forsigns of where the broader economy is headed.
Where it's headed rightnow is for some weak growth, based on whatCaterpillar was saying on Monday.
It predicted worldwideeconomic growth of 2.7 percent for next year, up from the 2.5 percent growth it expects for 2012. It expects the cheap lending offered in mostcountries to continue next year, although"growth has been slow to respond," the company said.
"As a result, we are not expecting improvement in overalleconomic growth untilthe second half of 2013," the company said.
Caterpillar sells to dealers, who turn around and sell to end users like construction and mining companies.Those dealers are tryingto cut inventory, so they're ordering less equipment than customers are buying.
In response, Caterpillar said it has reduced production, resulting intemporary shutdowns and layoffs. Lower production will continue until dealer demand lines up with end user demand, Caterpillar said.
As a result, Caterpillar cut its 2012 outlook for the second time this year. Revenue is expected to grow 9.7 percent to $66 billion, after rising 41 percent in 2011. Profit is now forecast at $9 to $9.25 per share, down from aprevious forecast of$9.60 per share.
Analysts surveyed by FactSet had expected revenue of $67.2 billion, with profit of$9.41 per share.
The economy this year"has been a disappointment," Caterpillar said, with growth lower than expected in the U.S. and China, and with much of Europe in recession.
Caterpillar expects 2013 revenue to be about the same as this year, in a range of up 5percent to down 5 percent.
"We're not expecting rapid growth, and we're not predicting a global recession," Chairman and CEO Doug Oberhelman said.
The company said salesof mining gear will fallnext year. Lower prices for metals and coal, along with higher operating costs, have hurt profit margins at many mining companies, Caterpillar said. Sales of construction gear are expected to increase, and it expects improving activity in the U.S. It expects engine sales to be flat.
Profit in the third quarter rose 49 percentto almost $1.7 billion, or $2.54 per share. Thatcompares with profit of$1.14 billion, or $1.71 per share, a year earlier.Revenue rose 4.6 percent to $16.45 billion.
The results included a gain of $273 million, or 27 cents per share, from selling a majority interest in a logistics business. Analysts surveyed by FactSet had been expecting a profit of $2.21 per share, on revenue of$16.64 billion.
