Caterpillar Share Fall After Costs Rise due to Tariffs

Shares of Caterpillar sank 8 percent after the heavy machinery maker gave disappointing 2018 guidance and management pointed out costs were rising because of tariffs.

The company reiterated its prior 2018 adjusted earnings guidance to range of $11 to $12 per share, but Wall Street expected the company to raise that forecast. The lower range of that forecast fell short of the $11.65 EPS estimated by analysts surveyed by Refinitiv.

“Manufacturing costs were higher due to increased material and freight costs. Material costs were higher primarily due to increases in steel prices and tariffs,” the company said. “Freight costs were unfavorable primarily due to supply chain inefficiencies as the industry continues to respond to strong global demand.”

Later in the statement, the company said the impact of tariffs for third-quarter material costs was about $40 million.

“For the full year of 2018, we expect the impact of recently imposed tariffs will be at the low end of the previously provided range of $100 million to $200 million,” the company said.

via CNBC

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