(Bloomberg) — Caterpillar Inc. warned that revenues will be “slightly lower” in 2025 as demand concerns weigh on the outlook of the heavy equipment maker.
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The guidance, disclosed in a presentation, arrives at a tenuous time for global manufacturers, given the tariff threats by US President Donald Trump that could drive up costs and affect supply chains worldwide. The warning comes as Caterpillar reported fourth-quarter profit that beat Wall Street estimates due in part to higher-than-anticipated construction demand.
“Management’s 2025 commentary seems to suggest an outlook that’s below consensus, which is likely to put downward pressure on estimates,” Christopher Ciolino, Bloomberg Intelligence’s senior industry analyst, wrote in a note.
Shares of the Irving, Texas-based company fell as much as 5.8% in premarket trading in New York.
Caterpillar is viewed as a bellwether for global economic growth since it supplies heavy equipment to the construction, mining and energy industries around the world. Among the challenges ahead, Caterpillar also faces economic headwinds across China and Europe.
Still, the company could benefit this year from efforts by the Trump administration to bring back manufacturing to the US as well as any potential rise in global infrastructure projects.
Shares of Caterpillar had climbed more than 9% from the start of January to Wednesday amid optimism for an uptick in the company’s energy and transportation business, as well as its role as a leading producer of backup power for data centers.
Investors, though, have been concerned by elevated inventories of Caterpillar machines at dealerships that sell to consumers. Such stockpiles provide an insight into demand — high inventories suggest customers aren’t buying machines off dealer lots and low levels indicate strong consumption. Caterpillar said Thursday that it isn’t expecting a significant change in dealer inventories this year.
Fourth-quarter adjusted earnings were $5.14 per share, beating the $5.05 average estimate of analysts polled by Bloomberg.
(Updates shares and adds Bloomberg Intelligence comment.)
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Caterpillar, a leading manufacturer of construction and mining equipment, has announced that it expects lower revenue this year due to weak demand from key markets. The company’s stock fell sharply following the announcement, indicating investor concerns about the future prospects of the company.
Despite a strong performance in recent years, Caterpillar’s outlook for 2021 has been dampened by a slowdown in construction activity and reduced spending on infrastructure projects. The company cited ongoing supply chain disruptions and global economic uncertainty as contributing factors to its lower revenue forecast.
Investors are closely watching how Caterpillar will navigate these challenges and whether the company can implement strategies to boost growth in the face of a challenging market environment. With its reputation for quality products and strong brand recognition, Caterpillar will need to demonstrate agility and resilience to overcome the current headwinds and maintain its competitive edge.
As Caterpillar falls after forecasting lower revenue this year, the company faces a critical juncture in its growth trajectory. It remains to be seen how the company will adapt to the changing market conditions and whether it can deliver on its long-term strategic goals. Investors will be watching closely as Caterpillar navigates these challenging times and works to regain investor confidence.
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