PEORIA, Ill. -- Caterpillar's third-quarter profit was essentially cut in half with the global economy stuck in a funk, and the company said it expects that malaise to extend into next year.
The construction and mining equipment maker lowered its outlook for the year, and shares of Caterpillar slipped almost 2 percent Tuesday.
Falling commodity prices on farms, in the mines, and in oil fields have forced a deep reduction in equipment spending.
The earnings report Tuesday was the first since Caterpillar announced that longtime Chief Executive Officer Doug Oberhelman was stepping down.
Oberhelman said in a company release that there is an abundance of used construction equipment in North America, as well as idle locomotives. Around the world, mining trucks have been parked and are unused, he said.
"Economic weakness throughout much of the world persists," he said. "While we are seeing early signals of improvement in some areas, we continue to face a number of challenges. We remain cautious as we look ahead to 2017, but are hopeful as the year unfolds we will begin to see more positive momentum."
Caterpillar announced last week that Oberhelman will step down at the end of the year and be replaced by Jim Umpleby, an executive who has worked at the company for more than 30 years. Oberhelman will remain chairman through March and then retire.
"At some point, and I think we're getting closer to that point, our business will turn up," Oberhelman said. "It's a good time for Jim to take over, as I know Caterpillar will deliver even better financial results when key industries begin to improve and get back to mid-cycle replacement demand levels."
The company's stock is up about 40 percent since Oberhelman was named CEO in 2010, but Caterpillar has posted falling revenue for the past three years. Oberhelman said Tuesday during a conference call with investors and analysts that he decided to leave on his own, citing his age.
"There's no drama here," the 63-year-old said.
Caterpillar now expects annual per-share earnings of $3.25 and revenue of $39 billion, down from its previous forecast of $3.55 per share and revenue between $40 billion and $40.5 billion. Its outlook is below the $3.53 per share earnings and $40.1 billion in revenue that Wall Street analysts expected, according to FactSet.
Looking ahead to next year, the company expects revenue to be essentially flat. If oil prices remain stable or rise, the company said it may see a more "positive" second half of the year.
"We remain cautious as we look ahead to 2017," said Oberhelman.
Overall, the company reported net income of $283 million, or 48 cents per share, in the three months ending Sept. 30, down from $559 million, or 94 cents per share, in the same quarter a year ago.
Earnings, adjusted for non-recurring costs, came to 85 cents per share, beating Wall Street expectations of 75 cents per share, according to Zacks Investment Research.
Revenue for the company, based in Peoria, Ill., fell 16 percent to $9.16 billion, short of the $9.8 billion that Wall Street had expected.
Shares of Caterpillar Inc. fell $1.51, or 1.8 percent, to close Tuesday at $84.48.
Information for this article was contributed by Andrew Willis of Bloomberg News.
Business on 10/26/2016