Caterpillar Inc., the bulldozer manufacturer President Barack Obama used to help push his $787 billion stimulus plan, called the program disappointing and less effective than measures approved by China.
“The infrastructure portion of the stimulus package was disappointing in that it was less aggressive than other countries and missed an opportunity to correct past underinvestment in U.S. infrastructure,” Caterpillar said in economic commentary with today’s first-quarter earnings report.
Chief Executive Officer Jim Owens, 63, is a member of the president’s Economic Recovery Advisory Board. Obama visited the Peoria, Illinois, headquarters on Feb. 12, the final day of his campaign to press for Congressional passage. Caterpillar today reported its first net loss in 16 years as a global credit crunch and recession reduced demand from builders and miners.
“You can measure America’s bottom line by looking at Caterpillar’s bottom line,” Obama said during the February visit. “What’s happening at this company tells us a larger story about what’s happening in the American economy.”
Full-year profit will be about $1.25 a share excluding severance and other costs, or half the company’s January forecast, Caterpillar said. It attributed the lower forecast in part to uncertainty about stimulus plans and said the effect of U.S. measures would be “fairly limited.”
Revenue in 2009 may be about $35 billion, compared with the $38.4 billion average estimate in Bloomberg survey of analysts, the company said today. Caterpillar said the U.S. may disburse as much as $70 billion this year for infrastructure building, about 6.5 percent of last year’s total construction spending.
“We do not expect this increase to offset steep declines in private construction spending,” today’s statement said. Caterpillar is the world’s largest maker of construction equipment.
Caterpillar said it does expect some benefit this year from China, which enacted a stimulus package and cut its central bank interest rates to match the 2004 low, accelerating money growth, the statement said. The actions will let China’s economy grow at a rate of more than 7.5 percent this year.
“China, with an economy one-third the size of the United States, is allocating over three times as much for infrastructure,” Caterpillar said in today’s analysis. “Initial results from this package look promising.”
Caterpillar predicted the U.S. recession in October 2007 — two months before it officially began — and said today it expects the world economy to decline about 1.3 percent this year. Owens came to Caterpillar in 1972 as a corporate economist.
The first-quarter net loss of $112 million, or 19 cents a share, compared with net income of $922 million, or $1.45, a year earlier. Revenue dropped 22 percent to $9.23 billion.
Caterpillar fell $1.16, or 3.8 percent, to $29.32 at 10:39 a.m. in composite trading on the New York Stock Exchange. The shares had fallen 32 percent this year before today. Bloomberg