While Caterpillar’s CEO may have resigned recently, admitting that he misjudged the business strategy, the stock does not appear to be bothered, soaring by 15% since the Trump victory on hopes an infrastructure push would make excavators great again. For now, however, the woes at the heavy industrial manufacturer continue, with yet another month of declining global sales, the company’s 47th in a row.
To be sure, there was a glimmer of hope for CAT coming out of Asia, where retail sales continued the rebound after posting positive gains in the August and September, rising 12% in October, the biggest annual gain since September 2012. This however was offset by continuing declines in North America, the EAME and Latin Ameica regions, which declined by 16%, 14% and 24% respectively.
Following the latest, October, double-digit decline in worldwide sales, which dopped by 12% following the September 18% slide, CAT has not recorded a positive growth month for nearly 4 straight years, or 47 consecutive months.
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While Caterpillar’s CEO may have resigned recently, the woes at the heavy industrial manufacturer continue, with yet another month of declining global sales, the company’s 46th in a row.
According to the latest monthly release of global retail sales which traditionally presages the company’s earnings release due out tomorrow, the company reported that North American sales dipped by 23%, the steepest monthly decline since February 2010, confirming recent speculation that demand for original equipment is simply not there. The rest of the world did not fare much better, with EAME down 17%, Latin America sliding 23% and only Asia posting a rare rebound in sales, up 3%, the best print in the series since October 2012. Continue reading »
Caterpillar Inc (CAT.N) slashed its 2015 revenue forecast on Thursday and said it will cut as many as 10,000 jobs through 2018, joining a list of big U.S. industrial companies grappling with the mining and energy downturn.
While the relentless decline in Caterpillar retail sales has been duly noted here every month for nearly 4 years, now posting 44 consecutive declines, the latest, July data was downright depressionary.
According to the company, in the latest month – just when China was supposed to be rebounding and the US recovery getting “stronger” – demand took another sharp leg lower, as follows: Continue reading »
There was a time when Caterpillar was considered a key bellwether for trends in global heavy industries, and thus a proxy for the manufacturing sector. However, over the past 3 years that has not been the case for one simple reason: if one looks only at trends revealed by CAT’s retail sales the global economy has been mired not in a recession but an unprecedented depression, one which has now lasted some 43 months. That’s how long CAT has gone without a single positive month in global retail sales, well over double the duration of the acute collapse in demand following the financial crisis.
Since there is little we can add to this story that we haven’t sasid for the past 42 months in our monthly monitoring of demand for CAT products, we will just lay out the breakdown: Continue reading »
For Caterpillar, the great recession was bad, for about 19 months. In May 2010, after declining sharply for just under two years, CAT posted it first positive global retail sales comps and never looked back… until December 2012 when comp sales once again turned negative and have been negative ever since. For the past 41 months!
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Caterpillar is the world’s premier heavy equipment manufacturer, from tractors to locomotives to engines of every shape and size. As such, Caterpillar is used as a litmus test for the global economy. More sales by Caterpillar means more people around the world using heavy equipment to produce and build. Less sales means falling production and crashing demand globally. Currently, Caterpillar is suffering from one of the longest losing streaks in the company’s history – over 37 straight months of significant year over year retail losses. That is three years of solid decline. The mainstream has attempted to pin the lack of demand for Caterpillar machinery on the dramatic fall in oil prices (approximately 50% decline in the past six months), however, oil prices do not explain the three year span of negative year over year profits. The ONLY thing that explains Caterpillar’s troubles is a crisis level collapse in global demand. Period. Caterpillar is a signal, like the Baltic Dry Index, and like oil to some extent. As the current bear market rally in equities tops out and fizzles over the next two weeks, keep in mind the fundamentals. A system that requires exponential growth to survive cannot last long under the weight of collapsing demand. There is nothing that anyone, including central banks, can do to avoid this reality… Continue reading »
Moments ago Caterpillar reported its latest monthly retail sales statistics and the numbers have never been worse.
Not only is the fourth, feeble and final dead CAT bounce in US sales officially over, with December US retail sales tumbling -10% Y/Y, after “only” a -5% decline in November and hugging the flatline for the past few months, but sales elsewhere around the globe were a complete debacle: Asia/Pacific (mostly China) was down -21%, EAME dropping -12%, and Latin America (i.e. Brazil) continuing its free fall dropping by -36%, but global retail sales just posted a massive -16% drop in the past month, tied for the worst annual decline since the financial crisis. Continue reading »
For CAT the global manufacturing depression just turned 3 years old as the company has now suffered through 36 consecutive months of declining annual retail sales – something unprecedented in company history, and set to surpass the “only” 19 months of declining during the great financial crisis by a factor of two!
CAT has now suffered a record 35 months, or nearly 3 years, of consecutive declining annual retail sales – something unprecedented in company history! But fear not, the company has a cunning plan how to stem the bleeding…
Was: $2.9m | Now: $15,000: Caterpillar 992C wheel loader
Two weeks ago, when looking at the latest Caterpillar retail sales data…
… we said that “If Caterpillar’s Data Is Right, This Is A Global Industrial Depression.”
Today we get visual evidence of this, courtesy of an Australian heavy industrial equipment auction where machines such as a Caterpillar 992C wheel loader, which normally costs $2.9 million, can now be bought for just $15,000, a 99% discount!
As Australia’s ABC reports, now that the commodity bubble has burst for good, auctioneers are hard at work selling tens of millions of dollars of suddenly useless coal mining machinery for just a fraction of its original market value. Continue reading »
H/t reader squodgy:
“Like I said before, Cat’s products form the first stage of any large project.
If they have no orders, nobody has any orders & we grind to a halt.
When that happens, we all stand there looking at each other.
Then all hell breaks loose.”
And again, this is the Greatest Depression.
Most cats bounce at least once when they die, but not this one: after CAT posted its first annual drop in retail sales in December of 2012, it has failed to see a rise in retail sales even once.
In fact, since then Caterpillar has seen 34 consecutive months of declining global sales, and 11 consecutive months of double digit declines!
We have been covering the ongoing collapse in global manufacturing as tracked by Caterpillar retail sales for so long that there is nothing much to add.
Below we show the latest monthly data from CAT which is once again in negative territory across the board, but more importantly, the global headline retail drop (down another 11% in August) has been contracting for 33 consecutive months! This is not a recession; in fact the nearly 3 year constant contraction – the longest negative stretch in company history – is beyond what most economists would deem a depression.
… the Greatest Depression.
– Forget Recession: According To Caterpillar There Is A Full-Blown Global Depression (ZeroHedge, July 22, 2015):
There has now been an unprecedented 31 consecutive months of CAT retail sales declines. This compares to “only” 19 during the near systemic collapse in 2008. In other words, if global demand for heavy industrial machinery, as opposed to unemployed millennials’ demands for $0.99 Apple apps, is any indication of the true underlying economy, forget recession: the world is now in a second great depression which is getting worse by the month.
Welcome to the recovery!
– Welcome to the Recovery (New York Times, by Timothy Geithner, August 2, 2010)
– For Caterpillar, This Is What The “Second Great Depression” Looks Like (ZeroHedge, May 20, 2015):
To put Caterpillar’s ongoing second great depression in context, during the Great Financial Crisis, CAT suffered “only” 19 months of consecutive retail sales declines. As of April 2015, this number is now 29, and there is no hope in sight of seeing an annual rebounce any time soon.
– Caterpillar Suffers Worst Month Since Lehman, 26 Consecutive Months Of Declining Retail Sales (ZeroHedge, Feb 19, 2015):
Once upon a time, Caterpillar was the world’s industrial bellwether and a Dow Jones Industrial staple. Lately, in addition to suddenly developing a very close relationship with Federal authorities who “are investigating the movement of cash among Caterpillar Inc. ’s U.S. and overseas subsidiaries”, CAT has become a completely ignored and forgotten poster name of the “old-economy” (the on in which cash flow still mattered). However, there are those who still believe that the second coming “eyeballs” as the only valuation term category is destined to end in tears, and as such care about how companies like CAT do.
Sadly, we have some more bad news: Caterpillar just reported that in January, it suffered its worst retail sales month since Lehman, with global sales plunging 14% from last January (when sales in turn had dropped 8% from a year before, while the year before had slid 3% from the year before that and so on). In fact, January was so bad, it was the first month since 2013 when CAT reported declining sales across all regions in which it does business, now that the dead CAT bounce in North America is over.…
– Caterpillar Retail Sales Plunge By 13%, Most Since February 2010; Decline For 17 Consecutive Months (ZeroHedge, May 20, 2014):
The drubbing in sales across all other markets excluding the US continued, with sales in Asia/Pacific, EAME and Latin America all dropping by more than 20% compared to last year.
End blended result: global retail sales have now declined Y/Y for 17 consecutive months, which incidentally is just shy of the longest stretch of declining retail sales on record. Worse: the -13% drop in world retail sales matched the biggest annual drop since February of 2010.
– Caterpillar Global Sales Down 12%, Crushes Recovery Hopes With Negative Sales Around The World (ZeroHedge, Dec 19, 2013):
Among other things, the month of November was memorable because for the first time, Caterpillar – that bellwether of the old industrial economy in which “stuff” was actually made, dug out of the ground, erected, or otherwise processed instead of merely hosted ad impressions – posted declining retail sales in every region around the globe. This was the first time of uniform declining retail sales since February 2010. To say that this data conflicts massively with all the rumors, fairytales and lies about a global recovery, is an understatement which is why it has not been mentioned anywhere, in hopes the subsequent month would demonstrate some improvement and perhaps an upward inflection point. That did not happen.
Exploding pension fund shortfalls are blowing billion-dollar holes in the balance sheets of some of the Chicago area’s biggest companies, forcing them to make huge contributions to retirement plans at a time when cash flow and credit are already under stress.
Boeing Co.’s shareholder equity is now $1.2 billion in the hole thanks to an $8.4-billion gap between its pension assets and the projected cost of its obligations for 2008. At the end of 2007, Boeing had a $4.7-billion pension surplus. If its investments don’t turn around, the Chicago-based aerospace giant will have to quadruple annual contributions to its plan to about $2 billion by 2011.
Stock market losses also pounded pension funds at Abbott Laboratories Inc., Caterpillar Inc. and Exelon Corp., with others sure to emerge as companies file their annual financial reports with the Securities and Exchange Commission in coming weeks.
The pension gaps underscore a growing conundrum. Unfunded pension liabilities have to be subtracted from shareholder equity, weakening balance sheets at a time when it’s already tough to borrow money. Barring a reprieve from Congress, companies may be forced to make more layoffs or curb capital investments to divert cash to shore up pensions.
“There are companies out there faced with paying their pension plan or staying in business,” says Mark Ugoretz, president and CEO of the ERISA Industry Committee, a Washington, D.C., lobbying group. ERISA refers to the Employee Retirement Income Security Act of 1974, which sets standards to ensure pension plans are sufficiently funded.
The Chicago companies are symptomatic of nationwide woes. Last year, the 100 largest corporate pension funds in the U.S. saw their net assets decline by 21%, while liabilities increased 1.2%. Applying those averages to any of the region’s top funds puts almost all of them into the red by at least $1 billion.
Paul King, mine manager, inspects a Caterpillar Inc. haul truck at the Australian Bulk Minerals iron ore mine at Savage River in Tasmania, Australia, on Nov. 6, 2008. Photographer: Carla Gottgens/Bloomberg News
Jan. 26 (Bloomberg) — Caterpillar Inc., Sprint Nextel Corp. and Home Depot Inc. led companies today announcing at least 72,500 job cuts as sales withered and construction slowed amid a global economic recession that may persist through 2009.
The biggest layoffs were at Peoria, Illinois-based Caterpillar. The world’s largest maker of construction equipment said it’s cutting 20,000 jobs after fourth-quarter profit fell by almost a third.
Pfizer Inc., the New York-based drugmaker that’s acquiring competitor Wyeth for $68 billion, said it will close five factories and eliminate 19,000 jobs, or 15 percent, of the combined company’s workforce.
The firings came as American jobless claims hit a 26-year high, reaching 589,000 in the week ended Jan. 17, as shrinking demand for products and services forced companies to lower costs.
“Citigroup – which has received $25 billion from the bailout fund, plus $300 billion in government guarantees – has set up 427 tax haven subsidiaries to do business: 91 in Luxembourg, 90 in the Cayman Islands and 35 in the British Virgin Islands. Other havens include Switzerland, Hong Kong, Panama and Mauritius.”
The Government Accountability Office (GAO) has just issued a report showing that most of the nation’s largest public companies and government contractors rely on offshore subsidiaries to do business and cut their tax bills. Some of these same firms – including big banks and insurers – have already received tens of billions in taxpayer money from the federal bailout fund.
Citigroup, Bank of America, Morgan Stanley, American International Group, American Express have set up hundreds of tax-haven subsidiaries, the report states. All have taken billions from the bailout fund. Pepsi and Caterpillar, both of which have received billions in tax dollars from being major government contractors, also shelter revenue in offshore subsidiaries, The Washington Post says.
Oct. 6 (Bloomberg) — Federal Reserve Chairman Ben S. Bernanke may find the next fronts of the financial crisis to be just as chilling as last month’s downfall of Wall Street titans: its spread to corporate America and state and local governments.
Companies from Goodyear Tire & Rubber Co. and Duke Energy Corp. to Gannett Co. and Caterpillar Inc. are being forced to tap emergency credit lines or pay more to borrow as investors flee even firms with few links to the subprime-mortgage debacle. California Governor Arnold Schwarzenegger says his and other states may need emergency federal loans as funding dries up.
A cash crunch on Main Street would endanger companies’ basic functions — paying suppliers, making payrolls and rolling over debt. The widening of the crisis suggests that Bernanke and Treasury Secretary Henry Paulson may have further fires to put out even as the Treasury sets up the $700 billion financial- industry rescue plan approved last week.