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According to
one global manufacturing powerhouse, the outlook for 2012 is pretty rosey.
"There
Won't Be a Global Recession, Caterpillar Says" (TheStreet)
Don't worry
about a global recession. Caterpillar says it won't happen in 2012.
In an eventful
week in which Apple surprised the world with outsized profit and sales gains,
and the Federal Reserve said it would keep interest rates low for at least
another three years, Caterpillar's results sneaked up on investors. The construction-equipment
maker blew past earnings and revenue targets with its fourth-quarter results,
raising its outlook for 2012 in the process.
"I'm
surprised as well," says Oliver Pursche,
president of Gary Goldberg Financial Services. Pursche
manages the GMG Defensive Beta Fund, which counts Caterpillar as a top
holding. "It's a positive surprise. We added to the position when it
pulled back in the fall, but I don't think anyone can say they believed this
would happen."
The best news
in Caterpillar's report was the global company telling investors not to worry
about another global recession, despite enduring questions over Europe's debt
crisis and its effect on global growth in 2012.
"The eurozone public debt crisis has been a lingering
negative, but it is unlikely to trigger a worldwide recession,"
Caterpillar said in its release Thursday. The company says the risk of a
global recession has "diminished significantly" over the most
recent quarter, although Caterpillar noted concern that central banks could slow
economic growth if they raise interest rates prematurely.
Caterpillar
enjoyed an improvement in sales volume in all geographic regions in nearly
all of its business segments, driven by end-user demand.
"Any which
way you slice it, the reality is that even if you have some softness in the
economy this year and there is a slack in demand, the rate of which the world
is growing, the infrastructure theme is more than alive and well in the
long-run," Pursche says.
Unfortunately,
you can't assume that the company knows what it is talking about. Here
is what they had to say following the release of their
quarterly results exactly four years ago:
"Caterpillar
Affirms 2008 Outlook" (USA
Today)
Construction-equipment
maker and economic bellwether Caterpillar Inc. said Friday that it expects
resilient overseas economies to drive strong sales and profit growth this
year, even as the United States teeters toward recession.
...
Caterpillar
Chief Executive Officer Jim Owens said strong economic growth outside the
United States would offset weak domestic demand.
"Global
markets for mining, energy and infrastructure development are booming,"
he said in a statement.
Caterpillar expects
U.S. economic growth to slow to 1 percent this year, including continued
weakness in home construction.
The company is
predicting profits will grow by 5 percent to 15 percent in 2008, and sees
revenue rising 5 percent to 10 percent year-over-year. The prediction implies
2008 profit of $5.64 to $6.18 per share on revenue of $44.06 billion to
$46.16 billion.
"While we
expect anemic growth in the U.S. economy, we continue to see positive
conditions for our sales in most of the rest of the world," Owens said.
Of course, we
know what happened after that. We saw the worst global economic downturn
since the Great Depression (and Caterpillar's share price didn't fare
particularly well, either).
Remember, even
those who are at the economy's front lines don't always see the forest for
the trees.
Michael J. Panzner
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