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Home / NEWS / Donald Trump takes swipe at low Caterpillar sales

Donald Trump takes swipe at low Caterpillar sales

by John Bambridge on Aug 19, 2015


Donald Trump on the course in Dubai.
Donald Trump on the course in Dubai.

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Republican presidential candidate Donald Trump has singled out construction giant Caterpillar as an example of how the US is lagging behind other nations in  growth and trade.

“People are buying Komatsu tractors instead of Caterpillar tractors. I’m telling you, we’re in trouble,” Trump said on MSNBC’s Morning Joe.

Caterpillar has been a disappointing stock for some time, and in July it hit the lowest price in almost four years. Currently, the shares are down 15 percent year-to-date – their worst performance since the construction market dried up during the recession in 2008.

The $47bn US construction equipment company’s revenue has also slid by about seven percent on average over the past three years, and analysts predict an even bigger drop this year.

“With terrible end markets, Caterpillar’s management is somewhat limited in its actions on that front,” Kwame Webb, an analyst for Morningstar, told Bloomberg.

Caterpillar’s inventory days – or how long it holds onto machinery before being able to sell it – are also at the highest level since 2013, with the ratio reaching a 15-year high.

A recent move to cut costs by Caterpillar was to end its dump truck outsourcing deal with Navistar, while launching plans to its build own-brand dump trucks at its plant in Victoria, Texas.

The move could help Caterpillar more effectively leverage its reputation in the construction industry for high-quality machinery, while boosting work for its Texas plant at a time of falling demand.



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