Published on March 11th, 2015 | by Daily Station Team

Caterpillar (NYSE:CAT)’s Disappointing Quarter report

Caterpillar

The multibillionaire American corporation has had a good run in the market, selling, repairing and designing machines. However, the company’s activities recently went low and gave a very disappointing quarterly earnings report. The company’s sales had been shaking lightly for quite some time and it finally happened when the quarterly earnings report got published.

The company has a good name and reputation in the market, but analysts had started to predict this that this would happen a few months back when the company’s sales started to go plain and so the final quarterly report is not really a big shock for some market experts. However, the most amazing thing about the company is that it has continuously been breaking the sales expectations and its market share has also been growing by 14% despite losses.

The company also made huge sales revenues as well in the previous quarterly and yearly reports. The company’s investors however, should not think this will be over soon. As per the company’s operational performance same things can be expected in the next reports as well. The company’s sales revenue declined from $14.4 billion to $14.2billion in just this last quarter.

However, the biggest disappointment came as the company’s profit declined by a full 25% and also affected the company’s earnings per share, which went down to $1.23 from $1.54 of the previous year’s last quarter. There are a number of things pointed out by the analysts in the market due to which the company’s sales were damaged to a great extent; for example, the company initiated a huge restructuring campaign which cost them around $97 million.

But that is not all. The after tax effect of $0.12 per share was another contributing factor to the overall loss. Moreover, the company’s inventory saw a steep decline by a full $1.1 billion. Although this shows a little positivity in Caterpillar (NYSE:CAT)’s favor in its operational capabilities, but left a bad impact on the company’s profit margin.

If we take a look at the full year, the company’s revenue declined $55.2 billion from the previous year. If the restructuring costs are ignored, the company’s earnings per share for the entire year were $6.38 which is an improvement over previous year’s $5.97. Another important thing was the company’s debt to equity ratio which increased by a full 37.4% from 30% before.

According to analysts, 2015 seems a pretty challenging year for the company sales and revenues are being forecasted to be dropped from $55.2 billion to $50 billion this year. But even during the troubling times, there are things that are going in the company’s favour as well. The general decrease in oil prices have left a positively growing impact on the World’s economy and will eventually benefit the Caterpillar (NYSE:CAT) as well.


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