The world's largest maker of massive industrial equipment on Tuesday lowered its forecast for earnings this year, saying it did not expect economic conditions or its key industries to improve.
"World economic growth remains subdued and is not sufficient to drive improvement in most of the industries and markets we serve," the company said in its statement.
Because of the global scale of its operations and its involvement in long-term capital projects, Caterpillar's outlook is used as an informal bellwether of future economic conditions.
"Global uncertainty continues, and the recent Brexit outcome and the turmoil in Turkey add to risks, especially in Europe," the company added.
Caterpillar now sees adjusted earnings per share of $3.55 excluding costs, down from $3.70, yet higher than analysts' estimate for $3.52, according to Bloomberg. Its shares fell by 1.5% in pre-market trading after this downgrade.
Sales and profit for the second quarter beat analysts' estimates. Sales fell 16% year-on-year to $10.3 billion, while earnings per share was $1.09.
"Despite a solid second quarter, we're cautious as we enter the second half of the year," said CEO Doug Oberhelman. "We're not expecting an upturn in important industries like mining, oil and gas and rail to happen this year."
Caterpillar expects to layoff more workers in the second half of the year, and raised its estimate for restructuring charges to $700 million from $550 million.
"Amidst these very challenging market conditions, our balance sheet remains strong, and our employees are delivering better performance on everything from safety, quality and cost management to machine market position," Oberhelman said.