Ahead of earnings, Caterpillar dealer data paints mixed picture

April 23 Wed Apr 23, 2014 11:44am EDT

April 23 (Reuters) - Caterpillar Inc released unaudited dealer sales data on Wednesday that showed a deepening deterioration in global demand for its mining equipment but a continued, albeit modest, rebound in sales of construction equipment as well as reciprocating and turbine engines.

The numbers suggested the company's first-quarter earnings, due early Thursday, will be another mixed bag, unlikely to surprise investors on the upside.

The world's largest maker of construction and mining equipment said global dealer sales of its yellow earth-moving machines fell 12 percent year-over-year in March, after falling 8 percent in both January and February.

Equipment demand from mining customers was especially weak, Caterpillar said, with global dealer sales of those high-margin products tumbling 46 percent in March after falling 37 percent in both January and February.

That overshadowed a modest but continued recovery in global sales of machines to construction customers, which rose 9 percent year-over-year in March after growing at a similar rate in both January and February.

The downturn in demand for mining equipment was especially dramatic in the Asia-Pacific region, where dealer sales slumped 65 percent in March after falling 55 percent in February and 53 percent in January. South America was another region of pronounced weakness with mining equipment sales down 60 percent year-over-year in March after falling 49 percent in February and 36 percent in January.

The news was better on the engine side of Caterpillar's business. The company said global dealer sales of its gas turbines, diesel engines and generators rose 7 percent year-over-year in March after rising 2 percent in both January and February.

Double-digit increases in dealer sales of engines to industrial and power generation customers offset weakness in sales to customers in the transportation industry. Sales to oil and gas customers, which were down single-digits in January and February, stabilized in March and were unchanged year-over-year, the company said.

Caterpillar sells its equipment and engines through a worldwide network of nearly 180 independent dealers. So the unaudited dealer sales figures provide a useful, though incomplete, glimpse of the company's underlying business ahead of its official quarterly filings with the U.S. Securities and Exchange Commission.

After peaking at $65.9 billion in 2012, Caterpillar's global sales plunged nearly 16 percent in 2013 as capital investment by the global mining industry tanked.

The company has warned that sales could slip another 5 percent in 2014 if that weakness continues, though a pickup in the construction market could provide a positive offset. (Reporting by James B. Kelleher in Chicago; Editing by Chizu Nomiyama)

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Comments (1)
bertanderson wrote:
My gauges for the health of the economy is IBM, CAT and GE. IBM reported very weak results, GE results were flat in my opinion and it appears that CAT will be weak in both mining and general construction (including homes). It’s not unusual for CAT to be low on home construction based on yesterdays disastrous results for new home building (down 15%). The fact that mining is also weak is of great concern. I look to IBM rather than social media like Facebook for a gauge of the economy. I also see Apple sales being more social media type stuff. I don’t think Apple develops products of the serious business person. It’s for every unemployed and employed teenager in the world. I sad state of affairs.

Apr 24, 2014 4:08am EDT  --  Report as abuse
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