Caterpillar Sees More U.S., India Infrastructure SpendingShruti Date Singh
Caterpillar Inc., the world’s largest construction-equipment maker, said infrastructure spending may increase in India, Brazil and the U.S. in the wake of elections in those countries.
“In terms of India, we’re definitely going to see infrastructure spending increase at a significant rate,” Doug Oberhelman, Caterpillar chairman and chief executive officer, said on a conference call with analysts today. “I’m also optimistic in Brazil.”
Both candidates in Brazil, incumbent President Dilma Rousseff and opponent Senator Aecio Neves, are talking about “reflating” the economy and the country has used infrastructure as a way to do that in the past, Oberhelman said. Tax reform or legislation that boosts spending on infrastructure such as roads may help in the U.S., he said.
The U.S. will hold mid-term elections on Nov. 4 and Brazil elects a president in a runoff on Oct. 26. Indian Prime Minister Narendra Modi swept into office in May vowing to revitalize Asia’s third-largest economy. The U.S., India and Turkey have the “potential for increased investment in infrastructure,” Peoria, Illinois-based Caterpillar said in a statement announcing its third quarter earnings today.
The company is seeing “positive movement” in India as the new government pursues reforms and is seeing “some success” in Turkey, which is undertaking an airport project, Brad Halverson, Caterpillar’s chief financial officer, said in a telephone interview today.
Caterpillar’s fortunes are tied to global economic growth because its excavators move dirt in large civil projects such as airports, its shovels help unearth copper and iron ore and its engines power everything from oil rigs to ocean vessels. The manufacturer’s sales fell in 2013 and will be little changed this year amid slow economic growth, the company forecast today.
In 2013, about 61 percent of its sales came from outside North America, according to data compiled by Bloomberg. Asia made up almost a quarter and Latin America 14 percent.
Caterpillar said it expects 2015 sales and revenues to be “flat to slightly up” from 2014 as risks and uncertainties around the would could temper growth.