CHICAGO – Caterpillar Inc, already battered by a slump in demand for its mining machinery, faces slowing sales of compressors, pumps and gas turbines as oil companies reduce spending.
The impact will be felt by Caterpillar in early 2015 as drillers cut back and exploration declines, Chairman and Chief Executive Officer Doug Oberhelman told Bloomberg Television in a Dec. 22 interview.
While Caterpillar forecast in October that sales will be flat to slightly up in 2015, that view might now be optimistic given the decline in crude prices in the past two months, Sameer Rathod, an analyst at Macquarie Group, said in a Dec 16 report.
“The bottom line is, it’s a new risk for Caterpillar’s earnings outlook for 2015,” said Matt Arnold, a St Louis-based analyst for Edward Jones & Co Caterpillar’s energy and transportation segment had been a bright spot amid the gloom in the construction and mining markets. The company has seen revenue fall by about $10 billion since 2012 as lower metals and coal prices meant miners bought fewer shovels and trucks. Construction-equipment sales have been slow to recover since the recession.
While the Peoria, Illinois-based company’s signature yellow diggers and trucks are still a core business, it has expanded in the energy market with the acquisition of German engine maker MWM Holding in 2011. Caterpillar may look at more oil and gas deals, Oberhelman said Dec 22.