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Barloworld Falls on Caterpillar Outlook: Johannesburg Mover

Barloworld Ltd. (BAW), the world’s largest forklift dealer, dropped the most in almost two months after Caterpillar Inc. (CAT), the world’s biggest construction and mining equipment maker, cut its 2015 earnings forecast.

Shares of the Johannesburg-based company slid 3.4 percent, the most since Aug. 3, to 74.38 rand by the close in Johannesburg, after earlier falling as much as 4.6 percent.

Caterpillar said profit will be $12 to $18 a share, compared with a previous projection of $15 to $20. Barloworld makes about two-thirds of its earnings from distributing Caterpillar equipment, according to Mark Hodgson, an analyst with Avior Research (Pty) Ltd. This will increase after it acquires additional distribution and support units in South Africa and Botswana from the U.S. company, he said. Barloworld agreed in May to buy the units for $175 million.

“They are certainly dependent on Caterpillar’s products and a slowdown would certainly knock their order book,” Hodgson said by phone from Cape Town. “There is a lot of concern over commodity prices and global miners’ capex. Caterpillar hasn’t got the same sort of confidence in its order book and I guess that sort of read-through obviously creates slightly more uncertainty.”

While a global recession remains possible, Caterpillar is forecasting moderate and “anaemic” growth through 2015, Chairman and Chief Executive Officer Doug Oberhelman said yesterday in a presentation to analysts at the MINExpo industry conference in Las Vegas. Construction activity in emerging markets will probably show modest improvements, he said.

Oberhelman has bet on a continuation of growth in commodity demand by buying mining-equipment maker Bucyrus International Inc. for $8.6 billion last year and agreeing in November to acquire ERA Mining Machinery Ltd. in China. His plans are coming under pressure as mining companies cut capital expenditures after economic expansion slowed in China, the world’s largest user of coal and metals.

To contact the reporters on this story: Stephen Gunnion at sgunnion@bloomberg.net

To contact the editor responsible for this story: Vernon Wessels at vwessels@bloomberg.net

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