Caterpillar Inc. is expected to post a 9% sales rise in the fourth quarter, despite forecasting a pause in demand for industrial machinery. Analysts forecast earnings, on average, of $1.34 a share and sales of $10.5 billion. That would top the $9.66 billion in sales it posted in its 2005 fourth quarter.
The market cycle for machinery makers appears to be similar to a decade ago, Caterpillar executives said in a fourth-quarter preview, with a pause likely to last a year or two before higher earnings return.
Caterpillar also forecast a drop of more than 30% in the North American residential construction market, which in turn would cut demand for its trucks, backhoes and bulldozers. For 2006, it predicted sales of $41 billion in 2006, followed by $41 billion to $43 billion in 2007.
The current year could be a difficult one as far as demand for light-construction equipment, according to analysts, with Caterpillar dealers` high inventories and slower homebuilding activity potentially leading to a discount in machine prices.
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