Caterpillar CEO Takes Hockey Stick to Any Talk of 2016 Rebound

  • Company lowered earnings and sales forecasts for 2016
  • Said commodity rally may not be enough to spur demand

Caterpillar Inc.’s boss has a message for investors: while the darkest days of the machinery-demand slowdown may be over, don’t expect a hockey stick.

Chief Executive Officer Douglas Oberhelman and other executives used the hockey-stick metaphor three times to damp any expectations investors may have harbored for a sharp upward turn in second-half revenue, spending on U.S. infrastructure or Chinese construction.

Even as demand from Chinese construction industries improves after the country’s New Year for the first time in three years, Oberhelman warned against too much optimism. 

“It’s not a hockey stick,” he said on a conference call after quarterly results were announced. “It’s not a boom. It’s not a 2010. But it is the first time we’ve seen that happen and we have lifted our sales as a result of that this year.”

The Peoria, Illinois-based company didn’t skate around the full-year outlook, either, lowering earnings and sales forecasts earlier on Friday and saying a recent rally in commodity prices may not provide enough impetus to entice clients to increase purchases. Caterpillar’s shares have surged 15 percent this year along with a rally in commodity producers, making it the best performer in the Dow Jones Industrial Average.

The company kicked off the comparison hat trick when it provided context to its outlook for an improving second half, doing so “so you didn’t think that there was some big hockey stick the end of the year,” said Mike DeWalt, the company’s vice president of finance services. “There’s not. A bigger second half is normal.”

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