Caterpillar Shares Lower as Revenues Fall

Caterpillar reported a drop in sales Wednesday and lowered its revenue outlook but confirmed its profit forecast in results that dragged on shares.

The company, a bellwether for U.S. manufacturing, reported profits fell 12% to $2.5 billion in the third quarter, on a 4% drop in revenues to $16.1 billion.

Caterpillar, which manufacturers construction and mining equipment and produces industrial turbines alongside other energy equipment, said the drop in volume was due to lower sales of equipment to end users.

While pricing has remained solid, company officials struck a cautious note on a conference call with analysts.

"Since early 2022, price realization has been strong and often exceeded our expectations," said Chief Financial Officer Andrew Bonfield.

"In the third quarter this moderation began to occur as price realization was lower than previous quarters and generally in line with our expectations," he added.

Still, Caterpillar confirmed its earlier full-year profit expectations even as it projected 2024 sales to be "slightly lower" compared with the previous outlook.

"With volume slowing quarter over quarter, our experts caution that Caterpillar could be facing a cyclical downturn in demand that will last through 2025," said Ryan Keeney, analyst at Third Bridge, describing conversations with industry experts.

"Despite ongoing weakness in construction and resource industry segments, end-market growth in mining and Energy & Transportation offer positive signals as long as pricing does not start to erode," he said.

The company's shares fell 1.2% shortly before midday.