Caterpillar Likely To Post Lower Q2 Profit: Earnings Preview

(RTTNews) - Construction and mining equipment manufacturer Caterpillar is scheduled to announce second-quarter results before the market opens on Tuesday. On average, 21 analysts polled by Thomson Reuters expect the company to earn $0.22 per share for the quarter. Analysts have a consensus revenue estimate of $8.86 billion for the period. Analysts' estimates typically exclude special items.

The Peoria, Illinois-based company also manufactures and sells diesel and natural gas engines, as well as industrial gas turbines. Its main lines of business are Machinery business, Engines business and Financial Products business.

The global recession has had a negative impact on Caterpillar, affecting customer demand and increasing inventory levels. In April, the company reported its first quarterly loss in 17 years, hurt by lower sales and charges related to job cuts. The company's net loss for the first quarter was $112 million, or $0.19 per share, compared to net income of $922 million, or $1.45 per share, in the year-ago quarter. Total sales and revenues for the quarter declined 22% to $9.23 billion.

With the construction sector seeing little activity in the U.S. in the latest period, the heavy machinery company may not be in a position to be optimistic about a recovery in its U.S. operations. However, select emerging markets like China may lift some of its sagging spirit.

The U.S. Commerce Department revealed last week that housing starts rose 3.6% to an annual rate of 582,000 units in June from a revised pace of 562,000 in the previous month. The latest numbers marked the highest level since November 2008, but are significantly lower than their peak of 2.27 million units recorded in January 2006.
The U.S. Census Bureau of the Department of Commerce said earlier in July that construction spending during May was estimated at a seasonally adjusted annual rate of $964.0 billion, 0.9% below the revised April estimate of $972.5 billion. The May figure is 11.6% below the May 2008 estimate of $1,090.7 billion.

During the first five months of 2009, construction spending amounted to $368.8 billion, down 11.7% from $417.5 billion for the same period in 2008.

Last week, Credit Suisse reduced its estimates on the company to reflect deteriorating conditions overseas and concerns that ''we could be at the bottom for some time in the U.S.'' However, on July 20, analysts at Bank of America upgraded Caterpillar stock to "Buy" from "Neutral" stating that the construction machinery sales reached a cyclical bottom during the second quarter. In reaction, the stock gained close to 8% and was the biggest advancer among the Dow components in Monday's session.