There seemed to be a disconnect Monday, January 28: Caterpillar announced record profits per share for the fourth quarter 2018 and the full year, but its stock plummeted about 9 percent during the day.
The company announced that sales and revenues were up 11 percent for the fourth quarter and up 20 percent for the full year. It also saw its highest adjusted profit per share in company history at $11.22 – a 63 percent increase over 2017.
“It was a great year for Caterpillar,” said Chief Financial Officer Andrew Bonfield in a company video. “…Fantastic performance across the whole company.”
However, Wall Street seemed to zoom in on a 4 percent decline in sales for its Construction Industries in the Asia/Pacific realm that the company said was “due to lower demand in China.” Some analysts also said Cat missed its quarterly earnings outlook and were concerned about the company’s 2019 outlook, which they also said forecast lower than expected earnings.
The big worry was that the economic slowdown in China was having a deeper effect. Stock prices of other companies that have declining Chinese sales have also dropped, such as Apple.
Despite Wall Street’s worries, Cat executives forecast more growth in 2019, but that growth will be tempered.
“Our outlook assumes a modest sales increase based on the fundamentals of our diverse end markets as well as the macroeconomic and geopolitical environment,” said Cat CEO Jim Umpleby in the company’s news release.
