Caterpillar on Friday forecast full-year earnings below analysts' expectations as it struggles with sluggish global industrial activity.
The world's biggest construction and mining equipment maker said it expects 2020 profit of $8.50 (Dh31.2) per share to $10 per share, compared with the average analyst estimate of $10.63 per share.
"We expect continued global economic uncertainty to pressure sales to users in 2020 and cause dealers to further reduce inventories," chief executive Jim Umpleby said.
The Illinois-based company, considered a bellwether for economic activity, has been hit hard as its customers held off on big purchases due to uncertainty sparked by a prolonged US-China trade war.
Caterpillar's forecast comes a day after the world's largest package delivery company United Parcel Service forecast 2020 profit below estimates, citing global trade weakness and a slump in domestic industrial production.
While a trade truce between the US and China has eased trade tensions, the outbreak of coronavirus has clouded the economic outlook.
The outbreak has killed more than 200 people in China and has spread to 18 countries, from Japan to the US.
Chief financial officer Andrew Bonfield said the 2020 earnings outlook factors in the information the company has, thus far, about the coronavirus' impact.
He, however, said the situation in China is "very fluid", which could impact the outlook.
Caterpillar expects as much as an annual 9 per cent decline in retail sales this year, resulting in a reduction of up to $1.5 billion in dealer inventories.
In the face of weak demand, the company plans to keep a lid on its costs. It expects lower material and freight costs to cushion the hit on its profits.
Sales in North America, its biggest market, fell 13 per cent to $5.83bn in the fourth quarter. Total sales fell to 8.4 per cent to $13.14bn.
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The specs
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Farage on Muslim Brotherhood
Nigel Farage told Reform's annual conference that the party will proscribe the Muslim Brotherhood if he becomes Prime Minister.
"We will stop dangerous organisations with links to terrorism operating in our country," he said. "Quite why we've been so gutless about this – both Labour and Conservative – I don't know.
“All across the Middle East, countries have banned and proscribed the Muslim Brotherhood as a dangerous organisation. We will do the very same.”
It is 10 years since a ground-breaking report into the Muslim Brotherhood by Sir John Jenkins.
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How to vote
Canadians living in the UAE can register to vote online and be added to the International Register of Electors.
They'll then be sent a special ballot voting kit by mail either to their address, the Consulate General of Canada to the UAE in Dubai or The Embassy of Canada in Abu Dhabi
Registered voters mark the ballot with their choice and must send it back by 6pm Eastern time on October 21 (2am next Friday)
Our legal consultant
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Position: legal consultant with Al Rowaad Advocates and Legal Consultants.
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Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.
Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.
“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.
Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.
“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.
Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.
From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.
Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.
BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.
Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.
Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.
“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.
Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.
“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.
“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”
The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”
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EA Sports FC 26
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Rating: 3/5
