Two of the most iconic companies in the US manufacturing industry are not so excited about its moneymaking ventures this year. In fact, they see their sales falling as the global economy reels.
Caterpillar Inc. estimates that its sales for the current year will fall beyond Wall Street's expectations, while US Steel Corporation posted its worst decline in nearly three years and sees similar results in the next two months.
The gloomy forecasts show a falling enthusiasm from such corporate giants that are already feeling the pinch of a factory slump as well as major setbacks in corporate expenditures in its own soil.
It's also an indication of the pain being felt by global economies that may be worse compared to the trade dilemma that had crushed investor sentiment through much of 2019.
Top executives like Caterpillar's CEO, Jim Umpleby, did not hold back on the company's not-so rosy forecast. In a statement, he said they see a continued "economic uncertainty to put more burden on profits this year and cause dealers to further cut supplies."
Caterpillar's stock opened at $131.35 early Friday with a 12-month low of $111.75 and a 12-month high of $150.55. The company's shares have a 50-day moving average price of $145.43 and a 200-day moving average price of $134.98. Caterpillar currently has a market cap of $72.59 billion.
Shares of the company fell 3 percent in New York late Friday for a weekly retreat of 6.5 percent -- the most since May of 2019. US Steel, on the other hand, plunged 3.5 percent. An S&P benchmark of steel-related firms dropped to the lowest since October.
While global stocks rallied in the past three months on optimism that a China-US trade accord would lift demand in commodities and help boost business sentiment and manufacturing, the Dow Jones Industrial Average shed its 2020 gains, Friday.
For its part, US Steel reported a narrower-than-anticipated loss in the fourth quarter and signaled its current quarter would be "the trough of the year."
The Pennsylvania-headquartered steel manufacturer disclosed an adjusted net loss of $680 million, or 64 cents a share, on $2.82 billion sales. In the same quarter last year, it reported adjusted earnings of $1.82 per share on $3.7 billion revenue.
The results beat Wall Street's initial estimates, as the average projection of four other analysts polled by Zacks Investment Research was for a decline of $1.14 a share. Net profits also exceeded estimates, with four analysts surveyed by Zacks anticipating $2.71 billion.
The US government's latest figure of fourth-quarter growth indicated non-residential investment in equipment fell 2.9 percent after a 3.7 percent drop in the previous quarter. That indicated the worst back-to-back quarters since late 2016 for its manufacturing pioneers.
