What #Caterpillar Inc’s Financial Results Tell Us About the #Mining Industry

Bottom Line: It will be interesting to see if the ongoing weakness in the mining sector undermines sales further than anticipated. With little likely to lift metals prices or raise demand, the risk for further capex weakness is likely on the downside more than the up.

Caterpillar’s Results and the Mining Sector

What do Cat’s results tell us about global mining? Well, sales are up 9 percent in the US as the housing market is believed to have bottomed and construction activity has finally picked up. Sales to the mining sector overseas, though, continue to look weak as capital expenditure is postponed.
Both extensions and greenfield mining projects are being delayed and cancelled as miners find it tougher to justify the financial conditions following steep falls in commodity prices. The outlook for most metals-based mining projects, with the possible exception of copper, looks much less certain today than it did twelve months ago and many major projects have been put back as a result.
Caterpillar’s numbers reflect this hesitancy and the understanding this will translate into lower sales in 2013. The firm is suggesting 2013 numbers will be much the same as 2012, with some construction growth in the US offsetting slower emerging market growth and Europe continuing to flat line as it has done this year.
It will be interesting to see if Caterpillar has this right, or if the ongoing weakness in the mining sector undermines sales further than anticipated. With little likely to lift metals prices or raise demand, the risk for further capex weakness is likely on the downside more than the up.
A repeat of this record year therefore seems like a Big Ask, even for a firm like Caterpillar.

See the whole story online here: What Caterpillar Inc’s Financial Results Tell Us About the Mining Industry