Caterpillar Revenue Forecast Update

(Reuters) – Caterpillar announced on Wednesday that it expects full-year revenue to be slightly lower than its previous forecast. This adjustment comes as higher borrowing costs and persistent inflation have led to a slowdown in machinery demand, resulting in a 5.3% drop in the company's shares.

The company has benefited from U.S. President Joe Biden's 2021 infrastructure law, a $1 trillion initiative focused on upgrading roads, bridges, and transportation infrastructure. However, the initial surge in demand due to government infrastructure projects has begun to wane.

Concerns over ongoing inflation and decreasing farm incomes have prompted U.S. machinery manufacturers to adjust product stocking, as dealers look to reduce inventory levels. Additionally, increased manufacturing costs have impacted profits.

In August, Caterpillar (NYSE: CAT) indicated expectations for 2024 revenue to be slightly lower than in 2023. On Wednesday, the company reiterated its expectation for a slight decrease in annual revenue.

Despite these challenges, Caterpillar maintained its adjusted operating profit margin and adjusted profit per share for the year, as price increases helped mitigate some effects from the sales slowdown.

The company reported that dealer inventory growth was less pronounced in the third quarter compared to the previous year. For the quarter, Caterpillar's adjusted profit per share fell to $5.17, missing the average analyst estimate of $5.34. Total sales declined by 4% to $16.11 billion, slightly surpassing expectations of $16.08 billion.