Caterpillar drove a bulldozer through hopes of a quick rebound by the global economy, posting its first quarterly loss in 16 years yesterday and slashing its outlook for the rest of the year.
The company, the world's largest manufacturer of construction equipment, led a crop of disappointing earnings announcements from US companies yesterday, providing a sobering response to several weeks of "green shoots" in the economic data.
"A great deal of uncertainty exists in the global economy, making it extremely difficult to know how our customers will respond during the remainder of 2009," warned Jim Owens, chief executive.
Economic stimulus spending in China is kicking in more quickly than a similar programme in the US and could start to have an effect there later in the year, but an overall rebound by the global economy is not expected until 2010, according to Caterpillar's forecasts.
Mr Owens has cut 24,000 jobs since December and became embroiled in a political contretemps in the early days of the Obama administration when the President suggested that Caterpillar would reverse some of its cuts if the US economic stimulus Bill was passed by Congress. The company is seen as an important bellwether of the economy because its sales reflect plans for new building projects across the globe.
Restructuring costs pushed the company $112m into the red in the first three months of 2009, and it is now projecting that this year will show the biggest sales drop since the 1930s. It halved its profits forecast for the year.
Other downbeat reports came from United Technologies, the hi-tech manufacturer, with a 28 per cent drop in first-quarter profit, and Coca-Cola, which said its first-quarter earnings were down 10 per cent on a year ago as growing demand from emerging markets failed to offset a decline in fizzy drinks sales in North America.
Three financial firms – the money manager BlackRock and the banks State Street and Bank of New York Mellon – all posted lower earnings.