CTA28 Jan 2013 20:53
Negative Points:
The latest period included a $580 million write-down in profits related to the company's acquisition of ERA Mining Machinery, a parent company of Zhengzhou Siwei Mechanical & Electrical Manufacturing Co, known as Siwei. Caterpillar recently disclosed that an internal probe revealed accounting misconduct at Siwei starting several years before the acquisition. ERA were seeking further information from Caterpillar at the date of this research note.
While Caterpillar said it was encouraged by recent improvements in economic indicators, the company remains cautious in its outlook.
If oil prices remain volatile, it could result in more volatility in CAT's petroleum segment, resulting in profit fluctuations.
The company expects reduced production levels to continue at least through the first quarter until inventories and dealer order rates realign with demand, added the group.