(Reuters) -Caterpillar expects 2024 revenue to be below its forecast from August, when it had said that full-year revenue will be “slightly lower” than 2023, sending the company’s shares down 3.7% before the bell on Wednesday.
Construction equipment makers had got a boost from a surge in post-pandemic demand for equipment, helped in part by U.S. President Joe Biden’s 2021 infrastructure law, a $1 trillion enactment aimed at upgrading roads, bridges and other transport infrastructure.
However, the initial boom in demand from government infrastructure projects has slowed down.
Caterpillar said it now expects annual revenue to be slightly lower than its prior forecast. The company, however, maintained its adjusted operating profit margin and adjusted profit per share expectations for the full year, as price hikes offset some impact from a sales slowdown.
Concerns about persistent inflation and declining farm incomes have resulted in U.S. machinery makers moderating product stocking as dealers try to cut inventory levels, while high manufacturing costs have also dented profits.
Caterpillar said on Wednesday that dealers moderated purchases during the third quarter compared to last year.
Rival farm equipment maker Deere’s shares also fell 1%.
Caterpillar reported a sales drop in two of its three biggest businesses that cater to construction and resources industries due to lower sales in North America, its biggest market.
Overall sales in the company’s Asia Pacific region fell 7% to $2.68 billion in the third quarter.
Its sales in the region have been pressured for the past several quarters due to the years-long real estate crisis in China, but steady demand in other geographies has helped negate some of the impact.
Caterpillar’s adjusted operating profit margin came in at 20% for the quarter, compared with 20.8% a year earlier.
On an adjusted basis, the company’s profit decreased to $5.17 per share in the third quarter, missing the average analyst estimate of $5.34, according to data compiled by LSEG.
“Expectations were fairly muted coming into the quarter, but the magnitude of the miss and an increase in dealer inventories were both worse than expected,” Citi analyst Kyle Menges said.
Total sales fell 4% to $16.11 billion, slightly beating expectations of $16.08 billion.
(Reporting by Utkarsh Shetti in Bengaluru; Editing by Shounak Dasgupta)
