) is reportedly laying off around 300 workers or 40% of its South
Milwaukee production work force by June citing lower sales as the
The company stated that various company locations are facing
short-term temporary layoffs to bring production in line with
demand. Earlier in March, the company announced job cuts at its
Belgium plant due to high costs and weak European economy,
similar to the strategy adopted by
Ford Motor Co.
) in the region.
Caterpillar's results have borne the brunt of continued economic
turmoil in Europe and its domino effect on the rest of the world.
Furthermore, reduced sales, lower production and a decline in
inventory primarily resulted in lower fourth quarter 2012
earnings for Caterpillar. Caterpillar remains challenged by
slowing demand and inventory correction as a result of higher
production than demand.
The downslide in sales continued in 2013 as well with
Caterpillar's worldwide sales declining 13% for the three months
ending Feb 2013, the third consecutive month of declining sales.
The growth rate has, in fact, worsened from the 4% and 1% dip
reported in Jan 2013 and Dec 2012, respectively.
The situation is not expected to improve in the first quarter of
2013 as Caterpillar expects sales to be significantly lower on an
annual basis as dealers are anticipated to continue to lower
their new machine inventories. The company foresees earnings to
be affected by lower-than-expected sales and negative cost impact
of continuing low production levels and declining inventory. For
fiscal 2013, sales are expected to be in the range of $60 to $68
billion and earnings between $7.00 and $9.00.
Even though Caterpillar will benefit from the recovery in the
U.S. construction sector, the recent slowdown in sales, declining
backlog, negative impact of the European debt crisis and a
slowing Chinese economy remain concerns. Caterpillar currently
retains a short-term Zacks Rank #3 (Hold).
Caterpillar currently retains a Zacks Rank #3 (Hold). In the
Deere & Company
) holds a Zacks Rank #2 (Buy) and is a more favorable option for
investors given its exposure to the agriculture sector.
CATERPILLAR INC (CAT): Free Stock Analysis
DEERE & CO (DE): Free Stock Analysis
FORD MOTOR CO (F): Free Stock Analysis Report
ARCELOR MITTAL (MT): Free Stock Analysis
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