Caterpillar Forecast Tops Estimates with the Recovery of Construction
One of the largest producers of mining and construction equipment, Caterpillar Inc. predict earnings for 2014 that has topped the estimate of the analysts as the recovery in the U.S. building industry stimulates the sale of excavators and bulldozers.
As the statement of the company, sales are expected to be about $56 billion with a plus or minus of 5%. The average of 13 estimates compiled by Bloomberg was $55.5 billion. Caterpillar jumped 5.9% to $91.29 in New York, which was considered the biggest profit since November 2011.
It is also expected that profit will be $5.85 per share, excluding $400 million to $500 million in restructuring costs, which is more than the estimate of $5.77 average. Illinois-based Caterpillar, Peoria, also confirmed approving a $10 billion share buyback plan through 2018 and will repurchase about $1.7 billion in stock in the first quarter that will mark its previous authorization.
The shares had dropped by 2.6% on January 24 in the midst of a general decline in equities. A selloff in developing-nation currencies led to concern that financial markets will be more unstable.
Caterpillar forecasts the growth of world economic by 3% in 2014, which is about 2% up from last year. It expects sales in its power systems and construction industries units to rise by 5%. Besides, it said that the resources segment, which includes mining equipment, will see revenue fall of about 10%. Caterpillar also added that the sales in construction industries rose by 20% in the fourth quarter as dealers did not cut inventory like last year and also the deliveries to customers in Latin America, North America and China escalated.
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