On Tuesday, Caterpillar (NYSE:CAT) warned that demand for its excavators in China would decline even more due to the country’s ongoing mortgage crisis, which had already weighed down construction equipment sales in the Asia-Pacific region by 17% in the second quarter.
The business organization forecasted that the country of China, which traditionally accounts for five to ten percent of its total sales, will continue to be unstable.
During Caterpillar’s (CAT) second-quarter results conference call, CEO Jim Umpleby and other executives stated that they do not see any improvements in supply chain problems and that they do not see any slowdown in cost pressures.
According to what is being reported, Umpleby stated, “we continue to incur additional costs due to factory inefficiencies and freight expenses.” He added that dealing with snarls in the supply chain is “still hand-to-hand combat.”
The company has also stated that it anticipates an increase in H2 sales due to increased public works spending in the United States and continued growth in the market for mining equipment.
According to an analyst from Jefferies named Stephen Volkmann, Caterpillar (CAT) is still facing production difficulties, as margins and retail sales in the second quarter were slightly lower than anticipated. Volkmann added, “China remains quite weak, and that’s a headwind for everybody, including CAT.”
After reporting lower quarterly profits in its construction, energy, and transportation businesses, Caterpillar (CAT) is the company that has contributed the most to the Dow Jones index’s losses today, falling by 3.6%.
Featured Image: Megapixl © Wolterk
