By Meredith Davis
(Reuters) - Caterpillar Inc. (CAT.N) on Friday chopped its 2016 earnings outlook and posted a lower first-quarter operating profit, hurt by steep declines in revenue from its construction, oil and gas and rail business segments.
Caterpillar now expects 2016 earnings per share at $3.00, or $3.70 per share excluding restructuring costs. The previous forecast was $3.50 per share, or $4.00 per share, excluding restructuring costs.
The company also trimmed its 2016 sales outlook range to $40 billion to $42 billion against a previously forecast $40 billion to $44 billion.
The company's share price slid 0.9 percent to $77.96 in midday trade.
The outlook revision came despite seeing some signs of improvement in construction equipment in China and recent increases in commodity prices, the company said.
"Our sense is that investors will continue to worry that second half of the 2016 forecast are still a stretch as revenue and pricing trends will both need to improve to hit targets," Stephen Volkmann Jefferies analyst said in a note.
Caterpillar said its mining customers were focused on reducing capital expenditures and the oil and gas industry's availability of used products impeded the company's sales of new equipment.
In the first quarter the company’s dealers said global retail machinery sales were down 13 percent, compared with the previous year.
The world’s largest heavy machinery manufacturer reported operating income of $494 million, or 67 cents per share in the first quarter, down from a revised $1.70 billion, or $2.07 a share, a year ago. Analysts had expected earnings per share of 68 cents.
Including restructuring costs, Caterpillar earned 46 cents per share, compared with a revised $2.03 a year earlier. Revenue fell to $9.46 billion from $12.7 billion a year ago.
Caterpillar suffered sales declines in all segments, with one of the steepest falls being in its energy and transportation business.
While all regions also reported slumping revenue, the hardest hit was Latin America, where sales fell 43 percent, due to the area's widespread economic weakness, a company statement said.
Caterpillar said while its cash flow has decreased from $1.04 billion to $218 million in the first quarter of 2016 due to lower profits, it is focused on maintaining its credit rating and dividend.
(Reporting by Meredith Davis; Editing by W Simon)