I know no one care about $CAT. It’s one giant nothing burger. But for those of you interested in knowing the condition of the global economy, just know that is somewhat milquetoast, according to CAT.
The commodity price improvement occurred too late in Q4 to have any material impact on earnings. Sales declined in all regions of the world, sans Asia.
Here’s the breakdown by region.
Middle East/Africa -30%
N. Africa -15%
Latin America -16%
Asia +10%
They attribute gains in Asia to infrastructure and residential projects in China. Perhaps Beijing is busy building more ghost cities?
In light of the recent commodity rally, the company is optimistic for 2017. They’re hoping the mining industry has bottomed.
They’re seeing strong construction numbers out of China and believe Europe has stabilized. Their Brazilian business is down a staggering 80% from the peak. They’re hoping for a bounce there as well.
They did note one particular concern in North America, in regards to used construction equipment interfering with their sales channels. Apparently, the junkyard operators are making a killing selling old, refurbished, construction vehicles, which is fucking up their models.
Perhaps $CAT can find a way to kill these people?
All in all, this was a decent report.
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I love Taco Tuesday’s
A decent report? They’re forecasting earnings for the year less than the dividend they pay out. Keep in mind that’s earnings…not cash flow, which is several degrees less. Regardless…It closes green today.
I’ve always wanted to rent a tractor and just go fuck some shit up, you know?
The reason Cat others in the heavy diesel powered equipment category are feeling pain from used machinery and trucks is simple.
EPA emissions standards have basically strangled Diesel engines to the point where the new Tier4 stuff offers less fuel economy and reduced horsepower and torpor from engines of similar displacement.
Add in a huge increase in complexity with the other exulting increase in maintenance costs and the following happens.
Truckers and heavy equipment owners scare investing serious $$$ into what amounts to remanufacturing older equipment that doesn’t have all the emissions crap on it.
Where a piece of equipment used to be scrapped out when faced with a $40,000 engine repair, it now makes economic sense to invest that and more into rebuilding it.
It is very clear that overly stringent EPA refs have hurt the economy while providing little gain in terms pollution vs previous generation engines.