Caterpillar hurt by currency, foreign markets

Equipment manufacturer Caterpillar pledged to buy back $1.5 billion in common stock in the third quarter in a bid to give a jolt to its stock following a second-quarter decrease in profit and sales.

The company warned that full-year global sales will equal about $49 billion, or $1 billion below its previous forecast.

Caterpillar earned net profit of $710 million in the second quarter, down 28% from the same period a year earlier.

Revenue plunged 13% to $12.3 billion, as foreign currency rates and a sluggish economy in foreign markets took a toll on sales.

Caterpillar CEO Doug Oberhelman blamed the decline largely on "difficult conditions in several of the key industries we serve."

"While economic conditions in the United States are modestly positive, the global economy remains relatively stagnant.  Many of the key industries we serve remain weak, and we haven't seen sustained signs of improvement," Oberhelman said. "Continuing economic weakness in China and Brazil, as well as uncertainty in the Eurozone and over Greece, haven't helped confidence."

He added: "Prices for commodities like coal, iron ore and oil are not signaling an improvement in the short term.  We are committed to controlling costs as we manage through this downturn, and that will position Caterpillar for better results when conditions improve."

The company's decision to buy back $1.5 billion in common stock during third quarter reflects an attempt to generate confidence among investors. In the first half of 2015, the company bought back $500 million in shares.

Follow Paste BN reporter Nathan Bomey on Twitter @NathanBomey.